Navigation bar
  Home Print document Start Previous page
 4 of 71 
Next page End 1 2 3 4 5 6 7 8 9  

© Copyright 2002-2003. All rights reserved.
Page 4
How To Investigate Any Business Opportunity
·
   
Discussion of any pending legal matters or contingent liabilities. 
·
   
A compendium of 3 to 5 years' financial statements.
3. Finding Buyers And Sellers
The first step is to find a business to buy or find a buyer for the business.
Print Advertising
Business opportunity classified ads are a viable way to advertise a business for sale. Many ads are
placed by intermediaries (business brokers or merger and acquisition specialists), but some are placed
directly by business owners. The larger local newspapers are the best source of such ads for smaller,
privately-held businesses. Sundays are generally the most popular days for these ads.
Business opportunity ads, whether for small or large businesses, usually describe the business in sev-
eral short phrases, keeping its identity anonymous, and list a phone number to call or post office box for
reply. The ad should be worded to demonstrate the business's best qualities, (both financial and non-
financial) and many include a qualifying statement describing the kind of cash investment or experience
required. A telephone number in the ad will draw more responses than a post office box number, but
may not permit the anonymity of a post office box.
Trade Sources
Trade sources can be a viable source of information on businesses for sale. Key people within an indus-
try or in companies on the periphery of the industry, such as suppliers, often know when businesses
come up for sale and may be aware of potential buyers. Every industry has a trade association and
trade association publications can do a good job of communicating the sale of a business in their indus-
try. If a seller thinks a buyer is likely to come from the same industry, the trade association's publications
department should be contacted to see if classified advertising is permitted.
Intermediaries
Business opportunity intermediaries generally can be divided into two groups: ) business brokers and 2)
merger and acquisition specialists. The differences between these two groups are subtle, but in general,
business brokers primarily handle the smaller businesses, and merger and acquisition specialists handle
the larger middle-market companies. Both groups usually ask for a contract with a 180 day or more ex-
clusive right to sell the business.
Business brokers charge a fee usually as a percent of the purchase price. Merger and acquisition spe-
cialists also charge fees, although often the fee is well under 10% since the transactions they work on
are much larger. Often, a good merger and acquisition specialist receives a portion of the fee in ad-
vance, paid as either a flat fee or an hourly fee. In exchange, the intermediary performs some tangible
service such as preparing a presentation package for prospective buyers and a valuation report. Al-
Previous page Top Next page