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First-Time Business Buyer

You've got your work cut out for you.
February 1, 2001

Q: I'd like to purchase a business. What do I need to do to start the process?

A: There are several factors you need to consider before purchasing a business, the first being the type of business you'd like to buy. Once you've determined that, your to-do list will be lengthy: You must identify businesses of that type that are for sale, contact the seller, complete a basic analysis of the business, make an offer, conduct extensive due diligence, negotiate final purchase documents, close the transaction, transition your management, and contact your customers and vendors (if appropriate). My first piece of advice is to retain an experienced mergers-and-acquisitions attorney and an accountant to help you evaluate your opportunities and work through the legal and financial aspects of any deal.

Because it appears this is your first time buying a business, I'll address the first few steps in more detail.

With regard to determining the type of business you'll purchase, there are several considerations, including:

As for locating a business for sale, one option is to contact a local business broker who may be representing a number of businesses in your area. The International Business Brokers Association, for instance, allows you to search for a business broker by geographic location. A third option, assuming you are interested in franchising, is to contact franchises directly. They can tell you about opportunities for new franchises or about purchase opportunities for existing franchisees in your area.

Loraine MacDonald is director of advisory services at USBX, an investment banking firm specializing in the mergers and acquisitions of small to midsized businesses. She has been involved in the valuation and sale of privately-held businesses for over ten years.

The opinions expressed in this column are those of the author, not of All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.