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The buyer, of course, will want to know the history of the business, how it came about, how it developed, and why the seller is now willing to sell.The usual reason for the sale of a small business is the age of the seller: he or she wishes to retire and does not have children or relatives willing to take over.
Most businesses are purchased by companies as a means of diversification or expansion.
In these situations several of the ingredients of success are usually present: the business has good reasons for the acquisition, it has experience in the industry to be entered through long contact, it has skilled people to evaluate acquisition candidates, it has the means to make the purchase in cash or through contact with funding sources, and it has the ability to run the purchased business. Similarly, the prospective buyer may be a wealthy individual with many years of business experience but presently no corporate base.
That process is described further later in this entry.
Evaluation of a business is central to price negotiations later and must be carried out with care and diligence in order to avoid legal and financial problems later.
Well-developed Internet resources usually enable a buyer to locate businesses within a state or zip code zone further subdivided by type of business and even asset-size categories.
Brokers specializing in different regions or nationally are relatively easy to find.
Assuming that the evaluation has produced satisfactory results, negotiations may become necessary to resolve remaining open issues.
These can take many forms and may deal with just about any aspect of the business, from the handling of certain liabilities to employment contracts for key employees or executives.
That, in turn, may cause changes—and even require additional fundraising efforts.
A search for candidates may reveal that not too many businesses are available or available in the right locations, that prices may be high or most candidates in trouble.