Prospective Business Buyers
Thank you for your inquiry. As you can appreciate, business sales are a highly confidential matter. As such, we require each Prospective Buyer to fill out and submit a completed NDA agreement as well as Prospective Buyer Profile. This will allow us to better understand who we are communicating with, determine whether or not you possess the means to pursue the opportunity, and most importantly, notify you of similar opportunities that have not yet become or never will become advertised to the general public (roughly 25% of our listings).
Upon receipt of all three pages online, or via fax at 310.652.8363, a comprehensive overview will be emailed to you if it is determined that you likely possess sufficient means. The overview will contain full photos of the opportunity, a financial summary, as well as a location map. If you are an intermediary, have ever been a licensed real estate agent, or are an attorney acting on behalf of clients, kindly identify your role, your firm, and have your client(s) comprehensively fill out the NDA and Prospective Buyer Profile and return both of these documents via fax to 310.652.8363. Responses such as Not Applicable, Bank Loan (without indicating % down), or simply indicating that you have “Investors” without specifically naming them will not be entertained.
In the event that insufficient data is provided, you may anticipate a delay in any follow-up correspondence, or in some instances (depending on how insufficient the data submitted is), no response at all.
You may contact our offices at 310.652.8353 shall any questions arise.
>> In the event that you not seek to complete the attached Prospective Buyer Profile, kindly read on to better understand why it is required.
We do understand and appreciate the data requested may be perceived as being sensitive to ask at this early stage of business evaluations, and may appear intrusive. We do respect your thoughts, however, please understand that we have a commitment to our clients to do so, as our sellers seek to have us ensure that prospective buyers are actually financially capable of acquiring a business opportunity prior to sharing confidential details of a sale (even the fact that a business is for sale is confidential). Further, some landlords often require that buyers are able to indicate a minimum amount of net worth prior to considering a lease assignment. Shall no qualifying mechanism be in place, a good deal of a seller’s time is wasted, while unqualified buyers or potential competitors gain confidential information, as well as an education on the business opportunity’s location, profitability and/or its operations.
Also, please note that the form requests that a Prospective Buyer to fill out as much data as they are comfortable with, however, with an indication in specific quantitative terms that they possess the ability to consummate a purchase. If you are only comfortable stating that you are able to purchase the business with cash on hand or from a home equity loan, and not with the assistance of an SBA loan or via the assistance of a group of investors, etc., this should suffice in most cases (depending on the size, complexity and confidentiality of the sale). If funding may be coming from an investor, simply name that investor and the potential amount of capital he/she seeks to invest. Please note that we are not asking for the sum of your financial ability, account numbers, or even a completed balance sheet. We simply need prospective buyers to specifically indicate, in specific quantitative terms, that they have the financial ability to move a sale forward on the specific opportunity that they are inquiring on shall they seek to do so.
Shall you not be comfortable at least indicating this, please understand that we have a legal obligation to our clients, and as such, we will only be able to assist those Prospective Buyers who are both cooperative and transparent when it comes to providing sufficient indication that they have the ability to move forward if they seek to do so. We do maintain confidentiality with respect to our your financial ability. As such, we do not share the details that Prospective Buyers submit to our clients for many of the same reasons that you may be hesitant to provide such data.
Finally, oftentimes Prospective Buyers argue that they would not seek data on a business unless they were financially qualified to consummate a purchase shall they sought to do so. To this, we’d like to share several reasons that we have found why unqualified candidates seek confidential data on business sales. Amongst many others, the top 10 reasons that this may occur include:
1. Unqualified parties seek to gain data on a confidential business sale to then “shop” the opportunity to investors, syndicate investment capital from several investors. While we appreciate that businesses are often sold via such means, each of business owners seeks to maintain the confidentiality of the sale, and therefore does not seek to have their business sale solicited in such a non-confidential and often reckless manner
2. The Prospective Buyers are actually employees who suspect a sale, and fear job loss.
3. Competitors seek competitive data on business performance.
4. Industry entrants seek competitive data to open their own location.
5. Vendors seek to learn which of their clients they are comfortable extending credit to, and which they are not. Vendors do not seek to extend credit to company’s that are for sale, as they fear the sale may be an indication of financial insolvency.
6. Sales Representatives seek to identify businesses for sale, and they view the Seller or Buyers as potential candidates for their products (e.g. for Sellers, you find the financial planners, note-vendors, etc. often seek to identify potential new clients who are about to receive a large cash payout; for Buyers, many sales reps seek to target business owners who have recently purchased a new company).
7. Parties who are not financially qualified hope to identify businesses for sale in an attempt to directly approach owners to try to convince them to partner, carry significant financing, etc.
8. Buyers may think that they are qualified, when in reality they are not. This is often the result of being provided misleading data from their bankers (with respect to the availability of a conventional bank loan or SBA loan), from loan brokers, or from aggressive mortgage brokers. Similarly, some Buyers underestimate business acquisition costs – as they do not realize the necessity of lease and other deposit requirements, working capital needs, inventory expenses, transaction costs, etc.
9. Parties who seek to entertain the concept of owning a business, without possessing the actual ability to do so as a means of gaining entry into an exclusive venue (as in our bar & nightclub sales) or for some other such outrageous purpose.
10. Business Brokers may seek to ‘shortcut’ established protocol by marketing to other Broker’s clients directly in hopes of obtaining a future listing. While this may sound highly unethical, less successful brokers may resort to this as a means of identifying potential clients without incurring the expense associated with obtaining new business.