While each business acquisition transaction varies in its complexity and size, knowledge of the process will help keep you on the path to a successful close.

Owner’s decision to sell 

Intermediaries understand that there are two elements necessary for a successful business sale:

  • The business offering must make economic sense to both a buyer and a seller.
  • Often, it’s the occurrence of a cataclysmic event like fatigue, declining health, divorce or the desire to retire, that pushes the owner’s decision to sell.

Determining Your Buying Parameters 

Before a search for a viable business can begin, buyers should have a good idea of their needs and buying requirements.

  • Geographic preference
  • Financial ramifications
  • Financing is an issue in most small business transfers
  • Type of industry, annual sales volume, number of employees, and longevity of business

Identify Potential Businesses

There is always an overabundance of buyers for good business offerings, the key is to determine the right fit. Buyers should be ready to sign a confidentiality agreement and provide verification of their financial ability to complete a transaction.

Determine the Value of the Business

The ultimate value of a business will be the final price negotiated between buyer and the seller. A seller may a request a business valuation from a CPA or a qualified valuation company.

Arranged Buyer and Seller Meetings 

The meetings with a seller are of paramount importance to the deal. The decision of both parties will depend upon financial information provided to each, the quick response to questions answered and how each party presents himself or his business.

Offer to Purchase / Letter of Intent 

After meeting with the owner and completing the analysis on the financial statements, buyers will:

  • pass on a business
  • ask for more information
  • prepare a formal contract

The two most common legal vehicles are a Letter of Intent or an Offer to Purchase and either document is accompanied by an escrow check, as a good faith gesture.

Negotiations – Structuring the Deal 

The seller has three primary decisions once a legal offer has been submitted:

(a) accept

(b) a decline

(c) negotiate

The purchase price, payment terms, length of training, consulting agreements, and allocation of purchase price are just a few items that can be leveraged to make a deal more favorable.

Due Diligence 

Due diligence is a time to learn more about the business to determine compatibility. The buyer performs due diligence to ensure that the books, records and operation of the business have been portrayed accurately. Due diligence can last between 7 to 45 days with the average length being around 21 days.

Closing 

This is the best part of the whole process, the time you are handed the keys to the business. Prior to closing, the offer to purchase or definitive agreement is submitted to an escrow company or closing attorney so that legal and governmental due diligence can be performed. The closing agent’s responsibilities vary from agent to agent, but at a minimum should include:

  • lien and title search
  • real estate and personal tax prorations
  • preparation of closing documents
  • disbursement of funds to the seller

To learn more about buying a business download this book by Alex Vantarakis, “Entrance– A Business Owner’s Guide To Buying A Company”


TVG was engaged to represent a well-qualified buyer who was ready to leave his job in corporate America.

This buyer was well positioned financially and poised to be an ideal business owner, judging from his background.

We found an ideal business with the right infrastructure, cash flow, location and in a growing industry. We moved quickly to submit an SBA financed offer, only to be informed that the seller accepted a full price cash offer from a competitor.

Yes, we were discouraged, but we worked diligently to find more options that satisfied the necessary buyer requirements. Over the next few months, we were outbid and in other cases, the businesses didn’t hold up to further scrutiny. At this point, some buyers would become frustrated, but this buyer understood the difficulty of a business acquisition and had confidence that TVG would find the right opportunity.

A buyer’s guide for a successful business acquisition:

  • Have your finances in order
  • Be Patient but be quick
  • Don’t get frustrated with the process
  • Understand you may lose your perfect deal for any number of reasons
  • There are people with more money than you
  • Be open regarding industries

Almost a year from the start of our campaign, we identified 2 very different businesses which the buyer felt comfortable closing on. We determined the business that had the most growth potential and made an offer that was accepted by the seller.  We were able to close the deal in December of 2017.


Did you know less than 40% of small businesses listed for sale, actually sell?

I know, scary! While the reasons vary, the main reason is that business owners do not have an action plan in place to sell their business.

When should a business owner start their exit plan?

The Vant Group recommends that the business owner start the exit planning process as soon as the business is established or acquired. Unfortunately, business owners do not think about exit planning until they experience a health scare or fatigue and then there is not enough time to incorporate systems and processes to maximize the business’s value. Many business owners invest time and resources into their business for years and are unable to monetize their investment, which is most often 80-90% of their net worth.

What are the best tips for a successful exit plan?

1) Set goals

It is very important for a business owner to develop an exit plan. The plan should be very detailed and address questions like:

(a) What age do I want to retire?

(b) How much do I need for retirement?

(c) Do I want to sell the business to my family or an unrelated third-party?

2) Obtain a business valuation

After the plan development, the next step is to assess the value of your company in today’s dollars. Assuming you have been in business for three (3) years or longer, it is necessary to obtain a business valuation from a qualified valuation person (business brokers and investments bankers are both good options).

3) Develop an action plan

At this step, identifying the obstacles or issues that decrease the value of your business and create an action plan to correct them.

The biggest issue TVG sees in small businesses is when business owners do not work “on” their business, instead, they work “in” their business. It is important to add the value of developed human capital to your business, giving employees the latitude of making decisions.
Business owners tend to depend on a few customers. It is easier to maintain and penetrate a few relationships than to manage a lot of different relationships. Unfortunately, your business value decreases when one customer represents more than 10% of the revenue.
Business owners must keep clean books and accurate records.

4) Assemble a deal team

It is important to develop a high-caliber team with the actual members of the team dependent on the business owner’s situation. The members of the team should be an attorney that understands business transfers, a CPA, and a merger and acquisition (M&A) intermediary – also known as a business broker or investment banker. Having a team around you will greatly increase your success and allow you to focus on running the business.

In the Forbes article, Study Shows Why Many Business Owners Can’t Sell When They Want To,  you will learn why selling a business is such a complex endeavor and some key ways to create a plan to increase the value of your business.

Need an action plan? Arm your business with The Vant Group, a team of senior investment banking professionals with a record success rate of completed transactions across a range of industries.  Specializing in providing merger & acquisition services for both sell-side and buy-side clients, TVG supports the client’s objective with expertise and professionalism in every engagement.