The expert help you need to buy a businessBuying is a team effort - and finding a broker is just the start of building your squad.Ask FSB
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(FORTUNE Small Business) -- Dear FSB: I wish to purchase a particular business that is available for approximately $1.1 million. I feel I need a person who can help me with the due diligence, valuation and general advice, etc. Where can I find such a person? - Lawrence Romano, Henderson, NV Dear Lawrence: You don't simply need one person. "Buying a business is a team effort, and your business broker is the quarterback," says Andy Cagnetta, president of Fort Lauderdale-based Transworld Business Brokers. The broker, or business intermediary, drives the deal through communication with the buyer, the seller, the attorney and the accountant. "We do everything to move the deal along, including some psychology," Cagnetta says. "It's an extremely emotional process," says Chris Diglio, chairman of the International Business Brokers Association (IBBA) and president of Orlando-based Corporate Investments International. "Often, the reason deals don't get done is that emotions get in the way. A good intermediary will take the emotions out of the transactions." To find a Nevada-based broker, start at the IBBA's web site: ibba.org. Members of this nonprofit organization must uphold a code of ethics and ongoing educational standards. The organization oversees two levels of certification, a Certified Business Intermediary (CBI) and the more advanced Merger & Acquisition Master Intermediary (M&AMI). You'll see those letters listed with the brokers' names. For a $1 million business, a CBI will be sufficently qualified to help you, Diglio says. Your broker can help you find your other team members, including an attorney to protect you and an accountant to help with due diligence. "Good brokers will have referrals for people they've worked with in the past - deal makers versus deal breakers," says Scott Bushkie, President of Green Bay, Wisc.-based Cornerstone Business Services. You need an accountant and attorney that specialize in these transactions, he says. "Stay away from 'door' accountants and attorneys, people who take any client that walks through the door. You need specialists," says Cagnetta, who also serves as the IBBA treasurer. The brokers agree that it's absolutely critical to be sure that this particular business is the right one for you. "That doesn't just mean that it will make you money," Diglio says. "If you're not suited to run it, if it doesn't suit your skills and lifestyle, then even if it's profitable, you'll be miserable." Most brokers use some form of buyer profile to help buyers find a good fit. Often, they're surprised at what they learn, he says: "Ninety-nine times out of a hundred, for example, someone walks in saying they want to buy a gas station and they walk out with a bowling alley." |
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