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Buy a Business

At Liddiard Real Estate Services we try to make the experience of buying a business as rewarding as possible. Whilst you should remember at all times that we act for the vendor and consequently cannot act for the buyer at the same time, we do endeavour to make the process as satisfying for the buyer as possible. The buying process is broken up into several stages:

  • Interview
  • Inspecting the Business
  • Negotiation
  • Substantiation
  • Contract
  • Handover

Interview

Initial Contact

You call us to make inquiries about a business and to set up an appointment with our broker.


Background Information
You provide us with information about yourself, such as a resume and financial statement. The more we know about you, the more likely it will be that we can find a business you will like. It is possible that we may not be able to show you the business you would like at your first visit but the more information we have, the easier it will be to find the right business for you.

Confidentiality
You sign an agreement promising to maintain the confidentiality of all the information provided to you about the business or businesses we discuss with you.

Inspecting The Business

Review Information

You and our broker review various types of businesses from our inventory and select those businesses that appeal to you. You will be given information about those businesses and an invitation to visit the premises and observe the business unofficially.

Personal Inspection
You will inspect the business and review the summary information we have in our possession. If you wish to take a closer look or speak to the vendors, that can be organised - usually after hours and when staff are not present.


Contract


Offer and Negotiation
If you like what you see and hear about a business and wish to proceed with a purchase, you make an offer which is subject to satisfaction about financial, lease or any other matters. This offer will be relayed to the vendor and negotiations on price and other material terms can commence. The offer can be made subject to substantiation of the vendor's claims about the business.


Deposit and Contract
Once the offer is accepted we proceed to draw up contract terms or send the terms to the vendor's lawyer who will prepare contracts. With the accepted offer, a deposit is paid into our trust account where it is held until settlement of the sale. This deposit is not refundable to you until contracts are exchanged.

Substantiation

Records
You, in company with your accountant or business adviser, then arrange to inspect what records or other documents are open to you in order to substantiate the facts about the business.

Trial
Another way to verify or substantiate facts is for the vendor to offer a trial. This is a procedure where the vendor agrees to allow the purchaser to personally attend at the business to verify facts, usually the takings of the business. This procedure takes place after contracts are exchanged.

Handover
Once the business transaction has been completed, you are entitled to take over the business and commence receiving the profits.

The contract can provide for a period of training where the vendor will introduce you to the customers and suppliers, and will guide you in the operation of the business.

A Tip
In our experience the foremost reason for failure in purchasing a business is the buyer's failure to do his or her homework. The person leaving a business will generally know more about the business than the person coming in. You as purchaser must equalize this imbalance. You must do your research, giving yourself a improved chance of success.

You must :

  • Observe the business as well as its records
  • Ask yourself "Can I see myself operating this business?"
  • Accept that it will be harder than it looks
  • Do more research than you thought necessary
  • Leave emotion and ego out of the equation
  • Always leave a percentage of capital in reserve, usually 5% of purchase price.

Who Can Help Me Buy a Business?

Liddiard Real Estate can act for you on the purchase of a business, just as we act for the vendors of businesses. We can examine the business, conduct due diligence and help negotiate the price. Of course, this relates to businesses other than the ones where we act for the vendor. We can only do one or the other.

If you see a business you like, or have an idea of the business you would like, contact us with your details.

If you feel you could be assisted by this service contact us now.