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The Buying Experience
CBI offers a broad range of successful, market leading businesses. Our proven track record greatly enhances a buyer’s opportunity to succeed. Prospective buyers registered with CBI benefit from our thorough understanding of businesses’ strengths and weaknesses in the marketplace. Whether determining the proper acquisition price and terms of sale, or assisting with the formulation of a comprehensive business plan to obtain financing, our effective use of information and resources assists buyers in achieving their dream of independence and satisfaction.
With a strategic network of offices in New England, New York and Atlantic Canada, CBI offers a unique process to properly match buyers with profitable businesses. Each associate, regardless of location, has complete information on every business listed with CBI. Our list of business opportunities is representative of the types and sizes of businesses we represent and is continually changing.
“I like the way people at CBI price businesses; they do exceptionally well in putting a fair price on them. CBI was great at the mechanisms of getting the transaction done. They kept in constant contact with all parties involved, the bankers, lawyers and accountants, as well as the principals. They kept the process moving so we met all the deadlines. We had the smoothest closing imaginable."
CBI strives to create success for both buyers and sellers in every business transaction.
Here are some commonly asked questions by buyers with responses based on our professional experiences. We want to hear your questions about acquiring a business, so please contact.
What do I need to do obtain information on a business that I am interested in?
Why should I contact a business broker?
Do most people who want to buy a business already know what type of business they want to acquire?
Why do I need to provide financial information?
As a business broker, do you work for both the seller and the buyer?
What are the benefits of buying a business versus starting a new business?
How do I prepare for a loan interview with a financial institution?
What documents do commercial lenders want to “pre-qualify” a buyer for a loan to buy a business?
What documents do commercial lenders want to “pre-approve” a business loan of a business for sale?
Take me through the process. What happens when I identify a business I would like to investigate?
What do I need to do obtain information on a business that I am interested in?
To properly identify and value business opportunities takes time and patience. This can be an exciting and rewarding experience and we welcome the opportunity to work with you. The first step is to complete our Buyer Registration Agreement. After you have registered with CBI, one of our Associates will contact you directly to discuss your financial interests in greater detail. You will also receive detailed information on new businesses that seem to fit your criteria as it becomes available. As a registered buyer, you may also request information on any business on our list that matches your financial profile.
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Why should I contact a business broker?
Business brokers are an excellent source of information about the business acquisition process. They can provide valuable market information on businesses that are available for acquisition and education in the business buying process. A business broker will provide you with referrals to accountants, attorneys, and other professionals who may be of assistance to you during the due diligence phase of business acquisition. business broker can be an excellent person to talk with about your business requirements.
An experienced business broker carefully screens potential business opportunities.
CBI implements rigorous standards that a business must meet prior to becoming a seller client. A low percentage of possible listings are accepted by CBI. This assures a buyer that the business is viable, the business value is true and accurate, and the business can be financed by a lending institution. back to question list
Do most people who want to buy a business already know what type of business they want to acquire?
Most potential buyers begin a search process with general parameters. They often tell us they want a business with good cash flow. Many prospective buyers specify broad categories such as manufacturing or service business or take the approach of identifying what business sector that they have no interest in acquiring. For many buyers, defining factors are geography and size. They want to purchase a business in a desirable geographic location and they have a certain amount of cash available for down payment that defines the price of business that they can afford.
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Why do I need to provide financial information?
We need to see your financial situation to help us direct you to a proper deal size. We have given our assurance to our client that we would only release confidential business information to prospective buyers who are financially qualified to complete the purchase. Also, financial disclosure affords you much credibility with a seller. A seller, after spending a lifetime of building a business, justifiably needs assurance that you are a qualified buyer.
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As a business broker, do you work for both the seller and the buyer?
We bridge the gap between buyer and seller. However, CBI works for the seller with the primary goal of facilitating a successful transaction. A successful transaction is doing whatever we need to do to create a win-win scenario for both the buyer and the seller. CBI has consistently accomplished this goal hundreds of times over the past three decades.
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What are the benefits of buying a business versus starting a new business?
When you buy an established business, you gain immediate cash flow. The pitfalls and potential for failure that come with a start-up venture are eliminated.
- Proven Concept – An established business is less risky because the business concept has been proven to work. The business has a track record which also makes financing a business acquisition much easier than a start-up; a bank will be able to look at the historical results of a business, rather than simply relying on start-up projections.
- Focus- When you buy an existing business, you can immediately begin to focus on growing and improving the business. The seller has already invested in all the start-up costs and laid the foundation for future growth.
- Brand – When you buy a business, you are buying a brand name. The on-going benefits of marketing and networking in the business community that the former owner has done will transfer to you. With an established name, new business is easier to develop than with an unproven start-up venture. A brand identity is a valuable intangible benefit to the acquisition of an existing business.
- Cash Flow –Typically, a sale is structured to cover the debt service, take a reasonable salary, and have some cash flow to grow the business to the next level. Some experts contend that most start-up businesses are not expected to make money for the first three years. Buying an established business helps to ensure immediate positive cash flow.
- People – In an acquisition, one of the most valuable assets you are buying is the people. The seller invested time and money to find and train those employees and assimilate them into the company culture. With the right team in place, a new buyer can more readily implement growth strategies. Plus, with trained employees in place, a new owner will have more liberty to take vacations, spend time with family, or work on other business ventures. When start-up owners and independent contractors go on vacation, the business goes too.
- Relationships --With the purchase of an existing business, an acquirer is also purchasing vendor relationships and a customer base that took years to develop. This is a valuable intangible benefit to the acquisition of an existing business.
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How do I prepare for a loan interview with a financial institution?
CBI business brokers frequently assist buyers in preparing a financing presentation. CBI business brokers are experienced with the financial institutions in each marketplace and can direct a buyer to the firm best suited to a particular transaction.
Before approving a buyer for financing, most lenders will conduct a thorough interview to ensure the buyer is someone who has thought through all aspects of the business and has the skills necessary to operate it successfully.
The widely used “Five C’s of Credit” will be addressed by most lenders in their credit analysis and buyers should be prepared to discuss how they meet each criterion.
- Cash Flow – The business being acquired should demonstrate sufficient cash flow to cover proposed loan payments and support any owner’s salary
- Capital - Most lenders require 20-25% cash down payment for a buyer. This should be in the form of non-borrowed cash
- Collateral – Some lenders will focus on the cash flow of the business and not on collateral, but all buyers should be prepared to pledge assets as additional collateral
- Conditions - A business acquirer should be prepared to discuss the local marketplace, competition, and growth plans for the business in the future.
- Character – A lender needs to determine whether there is a willingness on the part of the loan applicant to pay. The factors normally considered in examining character are: credit history, experience and qualifications, and employment history.
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What documents do commercial lenders want to “pre-qualify” a buyer for a loan to buy a business?
Most banks will require three years of business tax returns and financial statements, as well as interim financial statements. Additionally, a financing proposal and a business plan, a list of the business assets, and a proforma balance sheet and operating statement for future growth is required.
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What documents do commercial lenders want to “pre-approve” a business loan of a business for sale?
Most banks will require three years of business tax returns and financial statements, as well as interim financial statements. Additionally, a professional evaluation of the business acquisition, a business plan, a list of the business assets, and a sales performa for future growth is required.
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Take me through the process. What happens when I identify a business I would like to investigate?
Generally, you will find a suitable business on the CBI website or through direct contact with the CBI broker assigned to you. Once you have completed the CBI Buyer Registration and Confidentiality Agreement the broker will provide a Confidential Business Review (CBR) describing the business in detail. The CBR contains an overview of operations, a brief discussion of financial aspects of the business, along with areas of growth identified by the owner. The primary purpose of the CBR is to prompt you to ask the right questions when you meet the owner of the business. A site visit can only be conducted with a CBI broker present, and all aspects of the transaction must remain confidential. Once you decide to proceed with an offer you should consult with your professional advisors to ensure you are covering all the steps necessary to complete the transaction properly.
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