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Archive for 'HOW TO BUY A BUSINESS' Category

SBA Lender “Bait and Switch” : A Nasty Practice

By Hoke - Last updated: Tuesday, October 27, 2015

The SBA guarantees 75% of a Business Acquisition Loan. If the Buyer can make a 25% Cash Down Payment, in the event of a default, the Lender can collect the entire loan balance from SBA. It has no risk of cash loss. As written, the SBA program is wonderful and very helpful. However, Lenders have […]

The best websites to find a California Business for Sale

By Hoke - Last updated: Tuesday, December 2, 2014

The top and best websites  are www.bizbuysell.com, www.bizquest.com and www.bizben.com. Together these three websites account for about 80% of the California businesses for sale on the internet in California. www.bizbuysell.com and www.bizquest.com are the top two national business for sale websites. You will find redundant listings because most brokers post their listings on all three […]

Some Brokers Make Money by NOT Selling Anything: A Nightmare Tale…

By Hoke - Last updated: Wednesday, November 19, 2014

I all starts very innocently with wording in the broker’s Representation Agreement “in the event of an escrow default by buyer, the escrow proceeds are split equally between broker and seller”. This is how the nightmare begins… Think about this. Now the broker now makes five times more money (50%) in the event of an […]

Broker Pressure Tactic: “There are Other Buyers Interested!”

By Hoke - Last updated: Sunday, February 9, 2014

Use of ” There are Other Buyers Interested!” is a grossly overused broker tactic. Some brokers say this with an air of great urgency to every buyer as a knee jerk reaction. Sellers often encourage brokers to use this tactic. We discourage use of this tactic when no other buyers exist. First of all, how […]

Why a Buyer’s Business Broker Often Fails to Find a Quality Business

By Hoke - Last updated: Tuesday, January 28, 2014

Let’s discuss what goes on when you have most brokers perform an acquisition search. It is simple. They get on the internet Business for Sale websites and start looking. It is important to know that about 95% of internet business listings are from brokers, not principals. It is also important to understand that there is […]

Good Faith Deposit / Beware of Broker Trust Accounts

By Hoke - Last updated: Friday, January 3, 2014

A Good Faith deposit is often required to accompany the offer. The amount is typically 10% to 20% of the sale price. Because it is impossible to really really know if the sellers claims are valid without solid verification, most reputable business brokers will hold the Good Faith Deposit uncashed until Due Diligence is successfully […]

Finding a Higher Net Income Business

By Hoke - Last updated: Thursday, January 2, 2014

High Income businesses are rare. Here is the approximate breakdown of all high income businesses for sale in California as a percent of total businesses for sale: $1 Million+ Annual Discretionary Income: 0.04% $500,000 – $1M Annual Discretionary Income: 1.3% $250,000 – $500,000 Annual Discretionary Income: 5% When the buyer discounts these percents for desired […]

What is Due Diligence?

By Hoke - Last updated: Monday, September 3, 2012

Due Diligence part of the sale process when the seller opens all aspects of the business to the buyer. In essence this is where the seller must convince the buyer that the business performs and is as represented. This convincing is done mostly via providing historical documentation and buyer observation. The buyer has an opportunity […]

Escrow

By Hoke - Last updated: Monday, September 3, 2012

Typically after the successful completion of Due Diligence the acquisition process is ready to open escrow. The buyer should be committed to purchase the business without further doubts. At this time the Good Faith Deposit is deposited in the escrow’s bank Trust Account. The purpose of a business acquisition escrow is to provide free and […]

Written Offers

By Hoke - Last updated: Monday, September 3, 2012

Written Offers can range from Non-Binding Letter simple of Intent to binding Purchase Agreements. At minimum it should set the price and payment terms for sale of the business. The important issues with the written offer is that it should provide for a risk free or loss free means for the buyer to “walk-away” in […]