Frequently Asked Questions by Buyers
Who sells a thriving business ?
Who actually lists these businesses ?
I need more information before I contact the seller.
What happens when I send off a response to the seller ?
The seller has not responded - What happens next ?
There are very few franchises on offer, why is that ?
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What would it cost me to buy a business listed here..... Are there any hidden costs ? |
You would be paying the price listed or the eventual price negotiated between yourself and the seller. Biz.for.Sale operates as an advertising and informational service and would receive a small commission from the seller (not yourself) as an introduction fee should you conclude a sale. No costs in this regard would ever be for the buyer.
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Who would want to sell a thriving business... Are businesses for sale not usually in trouble ? |
Yes . . . . . . . and No ! Some are, some aren't. Businesses exist in dynamic environments, they are always either on the up, or going down. The seller is stating the present financial and trading circumstances to the buyer. Before buying, one would go through the process of due diligence which would be where you ensure (or rather your appointed accountant or financial professional does) that the business is making the profit it claims, prove the customers and debtors, value the assets stated, etc. For the buyer, this is a very important process and it should be undertaken by a specialist experienced in these matters. In this process you confirm that what is, actually is......
The real risk for the buyer can be in that the present owner suspects that market conditions are about to change. Perhaps a threatening competitor is about to enter the same market, maybe a major customer is about to close or switch to a different supplier or product, or maybe the firm's product technology is becoming obsolete. There could be lease problems or maybe key employees are planning to leave. Could a technology license be expiring? Is the business needing a huge capital hungry refurbishment? Are there legislative and political threats ahead ..... in the South African context the requirements for Labour Law (Equity Bill) and public procurement (BEE) could pose threats for a smaller business. Maybe these are standard business risks, but the present owner could see them as huge and threatening and maybe just not want to go there. Part of the buyer's research would be to try and determine the real existance and extent of such problems. Some attempt to establish these issues could be made in the due diligence process.
But if a business is profitable, why would someone want to sell it ?
The most common reasons for selling that we see stated are:
- owner emigrating
- ill health of owner
- partners splitting up
- lack of investment capital
- skills set mismatch
- owner wishes to retire
- owner has other business interests to pursue
or "not enough time for this one"
The business may, of course, be "in distress" as a result of an impending perceived threat by the current owner. This could be related, for example, to competitive or technological reasons. Your challenge is to try and identify these issues, if they exist at all, and then evaluate them from your own perspective.
What you might need to ask yourself is: "What synergy can I naturally bring to this business that will make it more profitable and will lessen whatever risks and negative issues that the seller experiences?" And then work out whether you are realistic in your answer.
| Who actually lists these businesses ? |
Originally (10 years back) the site was used exclusively by owner sellers. These days, however, about 70% of the businesses (82% by value) are listed by business brokers. So the chances are that your enquiry will be fielded by a broker who should be able to facilitate negotiations more efficiently than the average owner seller.
| I need more information before I contact the seller. |
Unfortunately, we cannot help you there. We seldom know more about the business than is displayed on the listing you see. We do not have the authority release the seller's contact details to you. Your expected course of enquiry is to complete and submit the contact form, found at the bottom of the listing details page. After the form is sent an "enquiry record" page will be displayed which we ask you to print and keep as a record of making the enquiry.
| What happens when I send off a response to the seller ? |
Your email is sent directly to the seller, which may be the business owner or a nominated agent such as a business broker. Generally, they would have a pre-prepared information pack which is sent back to you, or you may be contacted directly by phone.
| The seller has not responded - What happens next ? |
Hah! This is where that "enquiry record" page printed by yourself after submitting the enquiry becomes useful. If three days (72 hours) have passed, then simply fax that page to us. We will contact the seller to see why they have not contacted you, and either ask for them to do so or else get permission to release their contact details to you.
| There are very few franchises on offer, why is that ? |
The franchise agreement that governs most franchisees usually has a clause requiring the franchisee to either sell the franchise back to the franchisor or giving the franchisor right of first refusal. They can then either acquire that operation at a sweetheart price for resale, or else can resell it to people on their waiting lists. Things are further complicated by the fact that the franchisor usually wants to approve the prospective buyer and there is the further issue of the liability for upfront franchise joining fees which may not be transferable to the buyer. For these reasons most franchise resales are channeled back through the franchisor.
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Anything we left out, stuff you don't agree with.? Good article, bad article.? Please give us your comments and suggestions. |
