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Buying A
Business
 The
time and energy you spend negotiating to buy a business is
significant. As this process evolves, you should seek
advice from a circle of professionals that should
include an accountant, attorney, banker and/or financial
consultants. Talk to us and your bankers as
early as possible in your negotiations. Our advice on
how you can structure the financing is absolutely free!
We would typically identify “what it is you are actually
acquiring”, i.e. type of assets, etc., and help structure the
appropriate type of loans.
 NYBDC is a “term lender” and will
focus on the financing of the fixed assets. Based on
their useful life, we will determine the number of years for
the repayment of the loan. NYBDC’s loan sizes range
from $50,000 to $1,500,000. We are a complement to bank
financing and do not compete with our partner banks. Many
loan structures include NYBDC, Bank and other subordinate
lenders. It is difficult for us to finance goodwill,
customer lists and other intangible assets, but we have many
contacts in the financing community and may be able to put the
right team of lenders together. We can utilize
government guaranteed programs such as the U.S. Small Business
Administration, Rural Development, various community loan
funds and make contacts with venture capitalists to help put
the financing pieces together.
Here are some
things to consider when buying a business:
The
Purchase Price
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How
has the seller determined the price that they want to
sell the business?
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What are the specific assets you are acquiring and what is
their market value?
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Have they been appraised?
Financing
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How much cash do you
have to contribute to the purchase?
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How much cash do you have for a working capital cushion as you
learn the business?
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Is the seller willing to hold a note for part of the purchase
price?
The Business Cash Flows
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Is there a dependency on
any large customers?
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If you lost a large customer, how would it effect the business?
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Who are the company’s suppliers?
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Will the vendors sell product to
you at the same price and terms as the seller has historically
paid?
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What expense changes can you make when you own the business
to improve profits?
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What did the previous owner take in total compensation and
what do you need to take?
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If the company leases their space, how long is the lease and
can you assume it?
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Are there key employees that you
must have stay with you?
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How will you be sure to retain
the key employees?
These are just a
few of the issues you need to consider as you negotiate to
acquire a business.
Talk to your financial advisors
and then contact us.
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