Buying a business in Nashville can be very exciting, but it can also be a bit overwhelming. The buying process is much easier – and more likely to be successful – when an experienced business broker is at your side. That’s why so many prospective local business owners trust FCBB to make sense out of the buying process. If you’re still becoming familiar with the business buying process, these ten steps should make things more clear:
Once you’ve decided that you want to buy and run your own business, schedule a free, no-obligation appointment to meet with an FCBB Nashville agent.
Answer a comprehensive series of questions designed to reveal the types of businesses that are the best fits for you.
Know your finances, and be honest with your agent about them; without a clear financial picture, an agent can’t identify proper businesses for you. You should also keep the following in mind: Some business owners will offer terms that allow you to leverage the money you have to buy a larger business. It’s okay to receive money from a relative to help buy a business. Be prepared to provide proof of funds; most sellers won't disclose confidential details without knowing you’re able to meet the financial terms.
Have an open mind. There are so many different types of businesses in Nashville that you may not even be aware of the perfect one for you.
Be prepared to sign a buyer confidentiality agreement. These protect the seller against buyers who could use their confidential information to start a competing business. Business brokers are required by sellers to have this agreement signed before providing intimate details about the business.
Once you have an interest in a particular business, your FCBB agent will arrange a meeting with the seller. You’ll be able to view the business (often before or after hours of operation) and discuss it with the seller.
After meeting the seller, your FCBB agent will ask if you would like to take the next step. You may have already seen the financials and may be prepared to make an offer. If not, you may still place an offer on the business and request the financials through the process known as "due diligence."
Write an offer to purchase a business – if you’re working with FCBB, this will be easier than you expect. Our agents utilize the most comprehensive proprietary purchase agreement in the industry; they’re designed to protect all the parties involved in the transaction. Our agreement covers basics like the assignment of lease (for you to take over the business location) to more complicated issues such as key employee negotiations. At this point, you’ll be asked to give an Earnest Money Deposit (a.k.a. EMD) check typically in the amount of 10% or $10,000, whichever is greater. This check will not be deposited by the third party closing entity unless the offer is accepted by the seller.
Your FCBB agent will present your offer to the seller. If the Seller accepts your offer, you’ll move into the due diligence phase, where you’ll have a chance to thoroughly review the financials you requested. If you don’t approve of the information provided, you have the right to withdraw from the transaction and receive your EMD money back.
Once your contingencies and due diligence have met with your approval, you’ll be asked to sign a release which will take you to the final step of the process – the closing/business transfer.
A third-party entity (escrow/title company or transactional attorney) will prepare the final transfer documents and obtain clearances for taxes, etc., so you receive the business free and clear of all encumbrances (except those you agreed upon, such as leased phones or a copier). Congratulations, you just bought a business!
Business Buyers’ Frequently Asked Questions
Why should I buy a Nashville business instead of starting my own?
There are a number of reasons why purchasing an existing business has a better risk-to- reward ratio than starting a new one: These include a proven concept and/or product; with an existing business, you can already see if the business concept works. If the location is established, and employees are in place, you’re also likely to receive a quicker return on your investment.
Why should I use a business broker to buy my Nashville business?
There are several reasons why you should use a business broker: Brokers can introduce you to many more businesses than you would find on your own. Brokers can help structure the offer and act as a negotiator/buffer between the buyer and seller. You can also leverage a broker’s insights and tools; our Agreements, for example, offer a level of buyer protection that reflects more than 20 years of experience.
Why First Choice Business Brokers?
In addition to our experience, FCBB offers a nationwide network of offices, great familiarity with the Nashville market, and some of the most highly-trained business brokers in the industry. Our brokers are experts in the fields of business evaluation, business sales, business marketing, and buy/sell negotiations.
Will I be able to obtain financing to buy a business?
These days, bank loans are fairly difficult to obtain – especially without prior experience in the business you’re hoping to buy. As a result, seller financing has become increasingly regular.
How do I make an offer on a business I want to purchase?
When you work with FCBB, you’re able to use our time-tested, expertly-crafted agreements. These agreements cover everything from the basics to more complex issues that we’ve encountered over the last 20 years; our agreements are designed to protect all parties involved in the transaction.
What is due diligence?
Merriam-Webster defines due diligence as "research and analysis of a company or organization done in preparation for a business transaction." With regards to buying a business, due diligence means making sure that the actual business is the same as the version that was originally presented to you.
Do I need an attorney?
While having an attorney review the purchase documents is optional, your FCBB agent will likely suggest it.
How does a seller come up with the asking price?
If the seller is represented by a business broker, the price probably reflects one or more industry-suggested pricing methods. For example, the price may be based on a multiple of income or a combination of income and assets. Business brokers do their best to price a business so that it makes sense to a buyer while fulfilling the seller’s wishes – a win-win.
Aren't most businesses for sale losing money?
No. There are many reasons why Nashville businesses are put up for sale, including retirement, disability, death, divorce, partnership dissolution, and even just burn-out.
Have additional questions about buying a Nashville business?
Call First Choice Business Brokers at 615-450-0410 or submit the form below. We’ll be happy to schedule a free consultation and discuss how we can help you buy a business that will satisfy your personal, professional, and financial goals.