Confidentiality

• This is crucial to securing a successful transaction. Please make sure that you refrain from having any contact with employees, vendors or clients. Doing so could significantly impact the Seller’s business and the viability of your transaction. In addition, you may be liable for damages to the business.
• Show your financials. You will not be able to buy a business until the Seller, lender and Broker are comfortable that you have the financial resources to complete the transaction. The sooner you accurately disclose your financial status, the sooner we can help you get a deal done.

Earnest Money Check

• Upon acceptance of your offer, your earnest money will be deposited into the Sunbelt Trust account and the amount will be kept there until one of the following occurs:
  • You remove all contingencies or the contingency expiration date passes without written notice from you.
  • You terminate the transaction per the failure of a contingency. If so, please make sure you send your notice of termination specifying the failed contingency, in writing, prior to the contingency expiration date in the agreement. Your escrow deposit will then be released to you.
  • You close on the transaction. If so, the earnest money deposit will be applied to the down payment at time of closing.

Due diligence

• Please submit all of your due diligence requests to the Broker as soon as possible.
• The Broker will work with the Seller to obtain all the available information for your review.
• Remember, you have agreed in writing to keep this information confidential and only share it with your professional advisors such as your attorney.
• Remember, there is no perfect business. Even if there were, there would be no upside or improvement opportunity.

Seller’s Discretionary Earnings (“SDE”)

• The business typically is being offered at a multiple of the above statement, which is comprised of the following:
  • Cash equivalent benefit to a full-time owner-operator
  • Adjust out non-cash, or one-time, expenses (e.g., depreciation)
  • Assumes business is Debt free: Adjust out interest expense.
  • Owner’s discretionary benefit included in business expense, e.g., Salary, Auto, Travel and entertainment, season tickets, etc.
• Use the SDE Worksheet, which summarizes this information for you.

Business Services Transition

• Remember, as you work to get this deal to the finish line, do not neglect the services that you need in place
• Make sure you gather and review the following for the business
  • Insurance Policy
  • Accounting pricing and practice
  • Merchant Processing pricing and practice
  • Payroll practice pricing and practice
• Making certain that these services are being taken care of well and at the best price is key to your success once you step into running the business – get this done beforehand and you can work on your business and not be stuck in the back office.

Landlord

• Once you are satisfied with the major pieces of due diligence, then the Broker will coordinate your contact with the landlord. There is no upside to contacting the landlord unless you are comfortable with the financials and other major due diligence items. Be prepared to give the Landlord your financials and a statement of your qualifications.

Advisors

• Please make sure you utilize good advisors to assist you in your transaction. It is important to engage transaction-oriented advisors, professionals who focus on helping people buy and sell businesses, NOT Real Estate. Your Broker can assist in identifying advisors appropriate for the type and size of the transaction.