Dan Elliott
Aug 74 min read
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Buying A Business
If you’re interested in buying a business in the Houston, San Antonio or Austin areas, we can connect you with the right businesses for sale. At Sunbelt Texas, our business brokers are experts at managing the complex process necessary to buy a business and provide an environment for a successful transaction. Our business listings have been generated with diversity in type and size in mind. You will see businesses big and small from many of the major cities in Texas.
It takes a lot of research and due diligence knowing how to buy a business and before deciding to invest in or when to buy a Texas business. Starting with a quality listing means the legwork has been reduced. Our team will search through the massive listings available to find the only ones most relevant to you!
Buying A Business With Sunbelt Texas
Buying a business is a huge investment. You’re going to want someone who is capable, knowledgeable and has the skills and experience to walk you through every step of the transaction and that has the time to comb through businesses for sale listings to compile a consolidated list to meet your buying needs.
Our team is highly experienced in matching business owners to relevant, high-quality listings. We have more reach than anyone else and the technology needed to work quickly and efficiently to help you reach your goals.
Contact us to learn more about how we can make the process of buying a business easier for you.
Timeline For Buying A Business
How Long Is The Timeline For Buying A Business?
The timeline for buying a business in Texas is a detail-intensive exercise and can vary widely depending on the situation and type of business. If you want to buy a manufacturing business, your process will vary greatly as compared to buying a restaurant.
Here are the various stages with some time estimates (not every situation will have all of the elements below and some circumstances could have more steps). This typical time estimate starts after you have identified a business you would like to try to buy.
TIMELINE FOR BUYING A BUSINESS
A Prepared Investor's
6 Step Timeline For Buying A Business
Step 1: Initial Meetings
Initial meetings with seller to learn general information about the business
2
WEEKS
Step 2: Industry Research
1
WEEK
Additional research on the industry performance, outlook, products and markets, competitive landscape, major companies, operating conditions, and key statistics.
Step 3: Contingent Offer
Negotiate contingent offer based on financial and other information provided by seller
1
WEEK
Step 4: Full Diligence
3 - 4
WEEKS
Review tax returns, financial statements, 941 returns, sales tax returns, bank statements, licensing issues, customer records, vendor records, etc.
Negotiate terms of any lease assumptions for buildings, equipment, etc. with whoever holds the leases.
Are you using Small Business Administration (SBA) Loan to buy a business? Meet with SBA loan officer and prepare the loan application and business plan for submission to SBA.
Are you using 401(k) to buy a business? Meet with 401(k) plan rollover specialists to begin the process to utilize your 401(k) retirement funds for use as down payment.
Apply for any licenses necessary for operating the business. Consult with your CPA or other advisors relating to the purchase tax consequences, etc.
Step 5: Final Negotiations
Buyer and Seller negotiate and agree on final closing documents.
Training and consulting agreement seller will provide buyer.
Non-compete agreements.
Representations, warranties, and indemnification clause.
Purchase and sale agreement.
2 - 3
WEEKS
Step 6: Closing
Final agreements signed, buy and seller exchange funds and business turned over to buyer
What A Buyer Buys
What A Buyer Buys With A Business Purchase
*** For discussion purposes only. This is NOT legal or accounting advice. ***
The vast majority of business purchases are defined as “asset” purchases. On some occasions, a buyer will actually buy the stock of the corporation. For our purposes, we will outline an Asset Purchase transaction.
What Is An Asset Purchase?
An asset purchase is a method of acquiring a business that specifically identifies the assets and liabilities that the buyer is purchasing or assuming – what you get when buying a business. Most business owners own their assets inside of a corporation and the business owner actually owns the Stock in the corporation and does not own the assets directly.
The corporation owns the assets and the business owner owns the stock. A buyer typically forms their own legal entity (LLC, S corp, etc) to purchase the assets from the seller’s corporation.
Two Types Of Commonly Purchased Assets
Tangible Assets
Inventory, equipment, machines, vehicles, furniture, computers, fixtures, etc
Intangible Assets
Business name, goodwill, customer lists, contracts, non-compete agreements, phone numbers, websites, trained employees, etc
Asking prices normally include all the Tangible and Intangible business assets (unless otherwise identified) used by the business except:
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Cash and cash equivalents on hand and in checking or investment accounts
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Accounts receivable
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Prepaid items and deposits
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Any items in the seller’s corporation that are not used by the business (ex., personal cars, vacation homes, etc.)
Business Debt Liabilities, unless specifically identified otherwise, are the responsibility of the seller. Typical liabilities retained by the seller are:
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Accounts Payable and all debts
Liabilities Typically Assumed By The Buyer In An Asset Purchase
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Facility Lease – most buyers want the business to remain in the same location and will want to have the facility lease put in the buyer’s name.
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Any contracts where the future benefit goes to the buyer. For instance, Yellow Page Advertising may be an annual contract to be paid monthly. The buyer would assume the remainder of contract payments due after closing. Orders from customers, obviously the buyer wants to keep those sales.
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Often times the business has leases for equipment that the buyer will need to assume. These leases are common. The most common is the facility lease and a postage machine lease but there are many others:
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Brake machines in auto shops
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Printing presses in print shops
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Vehicles in delivery businesses
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Much more!
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* Buyers should make certain they understand what assets they are buying and what liabilities they are assuming. Buyers should make certain that any liabilities to be assumed or assets not included are clearly identified prior to or at closing.
Applying It To Real Estate
Sometimes the owner of the business corporation also owns the real estate personally and the corporation pays rent to the owner. This appears to be moving money from one pocket to another but is often done for tax purposes. When the real estate is available for sale from the same owner as the business it should be identified. Should buyer purchase the business and the real estate under these conditions the transaction will actually appear to be two transactions. Concurrently buyer would buy the assets of the business from the seller’s corporation and purchase the real estate from the seller personally.
WHAT A BUYER BUYS
Navigate Buying A Business With Sunbelt Texas
Although understanding the logistics of what you’re buying when purchasing a business, there are many more moving parts to the process.
Sunbelt Texas Business Brokers are knowledgeable about laws, trends, and every detail involved with buying a business. Click the button below to begin browsing our business listings, or to learn more about why you should choose the Sunbelt Texas team.
Using A 401K To Buy A Business
Tax Efficient Way To Use A 401K / IRA To Buy A Business
Your 401K can put you in control of your future; no more airplanes, no more layoffs, no more downsizing. After all, you planned well – you did the right thing, you saved for your future. Your future is now!
Your 401K / IRA Could Be The Tool You Need To Own That Dream Business
Did you know you can use your 401K/IRA and some other retirement funds to buy a business without paying the taxes and penalties for early withdrawal?
Maybe it's time to invest in your business skills.
Instead of investing YOUR money in mutual funds or stocks of a business where you have no management control, you can invest your savings in YOUR business. Buy a business and truly grow your equity.
After you buy your business and grow it… your business becomes your retirement fund. You can sell your business the same way you bought it but, with good management, for a lot more.
Using your retirement funds to buy a business is smart. We sell businesses every day that fund very comfortable retirements for their owners. The program was created by a CPA firm specifically to help people like you invest in themselves and own their own business. Gaining access to your money in a tax-advantaged way to buy a business along with an SBA Loan can allow you to buy a business or buy a franchise and create real value for you and your family.
Please complete the form below and you will be emailed information from a Certified Public Accounting firm about the 401K and IRA conversion for using your 401K to buy a business!!
USING A 401K TO BUY A BUSINESS
READ OUR BLOGS ABOUT BUYING A BUSINESS
Want to Learn More?
BUYING A BUSINESS BLOG
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