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© Copyright 2002-2003. All rights reserved.
Page 24
How To Investigate Any Business Opportunity
An Overview of the Buy-Sell Process
It will be helpful to take a detailed look at what happens when a business is bought or sold. First, con-
sider some of the thoughts that go through the minds of the buyer and seller during the decision-making
process.
The seller : (Before the transaction ) Shall I sell my business? What is it worth? How can I find a buyer?
(During the transaction) How much shall I tell this guy about my business? Will he raise his offer? What
terms shall I insist on? (After the transaction) Should I really have sold? I wonder if I could have got
more money. Wonder how the business is getting along.
The buyer: (During the transaction) Shall I buy this business? I wonder why he really wants to sell. How
much can I afford to pay? Where can I get the rest? How far will he reduce his price? (After the transac-
tion ) Now that I've bought it, which new idea shall I try first? Should I have known that would happen?
It's going to work out just fine-isn't it?
These are typical thought patterns. They mark the flow of decisions in the transaction. They also reflect
the doubts and hesitancy involved in the decision-making.
Case Study of A Potential Deal
The following step-by-step description of buying and selling a grocery store is basically the story of an
actual case. To make it more typical of all buy-sell transactions, some questions and problems from
other cases have been worked into the account.
Bill Smith wants to buy. Bill Smith had worked several years in grocery stores in Whitton, a city of
400,000. He had started as a carryout boy and progressed through every job in a store operation.
Bill was anxious to own his own store. He and his wife were in their early forties and eager to establish a
business of their own. They had saved about $ 16,000, and Bill was confident that he knew enough
about grocery stores to handle the operation. His wife planned to take care of the bookkeeping.
The Smiths had followed up many leads from the classified section of the newspaper. In every case,
they found the business either too run down to salvage or too large to finance. Bill had also talked to a
few real estate agents who specialized in business properties. But the agents' listings had not turned up
anything that interested the Smiths.
In August, Bill learned from a food salesman that Sam Brown was trying to sell his store. Sam's Market
was a small store on the other side of town, It had been operating for many years.
Sam Brown wants to sell. Sam Brown had been thinking about selling his business for several months.
He was reluctant to do it because the store had been established by his father. Yet he was finding the
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