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Proper Protocol for a Buyer

Proper Protocol for a Buyer

As a buyer of a business, nothing will be a quicker way to lose rapport with the broker or the seller faster than wasting their time.

You don’t want to lose rapport – that will affect price and a working relationship, generally.

Wasting time means asking a lot of questions, taking up the sellers time, and then going nowhere with the sale, or worst ghosting all together.

You want to be strategic with your initial analysis but there are ways to do that without wasting your time.


  1. Be Cordial and Respectful of Processes -We really love speaking to buyers. We love to understand what they are interested in. This business only or a business that matches certain industry criteria so we can steer you in the best direction for you.
  2. Read the Prospectus and CIM – As a rule, make sure you read the prospectus in full before asking questions. This will reduce redundancy.
  3. Go through the Broker- Do not circumvent the broker as a means of trying to speak directly with the seller to get a ‘better price’. A call will be arranged when you are serious. Sellers will communicate to brokers why did you waste my time, so avoid a bad situation altogether.
  4. Do your HW – Look up the business. Go to the website. Place a small order. See if they are legit. If you don’t know the industry, make sure you do your HW on the industry.
  5. Submit a Ballpark Offer – before you hop on the call with the seller, you want to gain trust with the broker and seller. You don’t have to show proof of funds right away, but you want to show you’re serious and in line with valuation. If you are not close and you just want to get a business for pennies on the dollar or a fraction of their asking price, and finagle a deal by getting 90% or more of seller financing, then you are going to be worlds apart. Be upfront about that from the start. Don’t waste anybody’s time. A seller wants 100% cash, it doesn’t mean they won;’t be flexible but we do not waste our client’s time with bad deals. If you say we are looking to put $x down and $y over time if everything checks out and matches the prospectus financials, we can move to next steps fairly quickly.
  6. Submit an LOI – Generally, if you are in the same ballpark, we can have you on the call with the seller. From there, your intention of the call should be to make sure boxes are checked off so that you can submit a formal LOI and get the process started. Calls are not preliminary in nature. You have a prospectus in hand that took hours and hours with the seller to formulate to answer 95% of your questions. Calls are there to verify what you need to know – is the seller a nice person, legit, do they have what it takes to be a partner or stay on, what are their intentions with the sale, etc.
  7. Due Diligence – once we have an acceptance in the form of an LOI, then we can move to due diligence. This takes anywhere from 7 days to 60 days, on average. 7 days if this a fairly simple all cash deal or low upfront. 60 days if you need several parties involved including financing for a large multi-million dollar deal. This is where you want to get tax returns, bank statements, and any other questions you need. An on-site visit may be appropriate but impacting the seller’s sales probably won’t be something that will fly without a deposit.
  8. Closing – Once everything checks out, you will get details for proper closing instructions. Usually this will be done by wire through escrow or directly to the owner based on the nature of the deal.
  9. Transition and Training – This is where the seller will stay on to help you understand everything in the deal. This will be baked in to the terms. You want to understand processes, but taking advantage of the seller is not something you want tyo do. The seller, unles otherwise agreed, is exiting. You want to be well trained on the business, but you are also buying a business which takes experience to run. No business venture is without risk, including one that you are buying no matter how many years it has been running successfully. You are the new owner now.
  10. Consulting – After the transition period is over, the seller is usually available for consulting. Hire them per hour or incentivize them with a % of sales they bring in if they are good to keep around to produce for you. Often times, a seller would like to be involved, but they want to be compensated for it. Make it a win-win and don’t expect services for free after the training period is over just because you bought a business from them.

If you would like to hop on a call with us to go over things related to acquisitions and general business overview, please schedule a time here. We do a one hour deep dive where we go over your needs as it relates to acquisitions & business expansion, and then we go on the hunt for you to line up a business that fits.

If you want a team who can help negotiate a deal for you so that the deal could keep moving forward without complication, please reach out to us:

Phone – (800) 773-1523

Email – acquisitions@Jarbly.com

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Jarbly is a leader in business consulting with expertise in helping with revamped strategies, enhancing valuation, positioning for an exit, and business and real estate sales.

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