Making a successful offer on a business isn’t just good luck…it’s good strategy!
If you’re wanting to buy a business and are heading down the route to making an offer, it pays to understand the steps that can make you a winner. There is a certain art to making an offer on a business that is more likely to get accepted.
Obviously you’ve been through the process of looking deeply into the business, understanding how it operates, your accountant has given a reasonable level of endorsement (they’re never ecstatic) and you know your borrowing capacity and loan requirements.
Before Making a Written Offer
- Think realistically about the price you’re going to offer. Don’t be a dreamer, hoping to snaffel it for a song. We’ve seen more keen buyers crash out as a result of making a ridiculous offer. They’ve either upset the seller to the point that they become insulted and won’t deal with the purchaser, or someone else has outbid them with a realistic offer.
- If the business is worth the asking price consider a full price offer. Alternatively, make your offer with a supportive comment that justifies why your offer is less than the asking price.
- Work out the terms and conditions that you would like to make with your offer. Adding them after an offer has been made can be a sure fire way of having them rejected. They must come with the offer.
- Work out the date at which the business could settle and you would like to be in the driver’s seat.
- Be prepared to pay a 10% deposit if the offer is accepted.
Making the Written Offer
- Outline the offer in dollars.
- Outline the terms and conditions eg. what the offer may be subject to.
- Understand that upon acceptance your 10% deposit will be paid.
- Outline the date that you propose for settlement and any particular factors you would like in the changeover process.
- If the seller is making an offer as part of the sale make sure you accept and confirm it in your offer.