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Old 12-20-2010, 09:39 AM
 
543 posts, read 1,169,531 times
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Hi all,
My sister is interested in moving to Houston. She's currently own a tailor shop in MN. We found a tailor shop for sale here in Houston. She's thinking about checking it out and potentially buy it instead of starting from fresh. We have never buy a business before and is wondering what's the process. If we need to get a broker involved, can you recommend a good broker that represent buyers? What are the things that we should be worry or pay attention to?

Any tips would be greatly appreciated.

MNCold
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Old 12-20-2010, 03:38 PM
 
Location: Houston, TX (Oak Forest)
4,516 posts, read 11,311,550 times
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Buying a business is like buying a house, the seller pays the commission so as a buyer it may pay for you to get one involved. However most brokers won't bother with small time businesses since the commission isn't worth the trouble. Make sure you have a contract that covers everything in detail, you can find ones online to modify for your purpose.
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Old 12-20-2010, 04:39 PM
 
724 posts, read 1,423,488 times
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Ignore the above advice.

There is generally no broker or selling agent. Generally speaking, you need to be able to take over all the leases, the intellectual property, the customer list, and everything pertinent to the business. You will want a non-compete clause in the contract to stop the seller from setting up shop two doors down and being your competitor. Generally, these sales are financed so that the buyer pays over time (which will give the seller incentive to be helpful). The sale will often be a part of the seller's retirement fund.

You need a transactional attorney who can draft an agreement that protects your rights. Someone will likely do this for several thousand dollars. It is your business. It is worth it. DO NOT do this with a form online as Chris_UT has suggested. There is no form that "covers everything in detail" that will be unique to your agreement.

Chris's advice is a recipe for disaster. Buying a business is NOTHING like buying a house. Seek professional legal advice.

Last edited by TheEconomist; 12-20-2010 at 04:47 PM..
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Old 12-20-2010, 04:47 PM
 
Location: Houston, TX (Oak Forest)
4,516 posts, read 11,311,550 times
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Depends on what kind or price range your talking about here if an attorney is warranted and how comfortable you are with legal documents.
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Old 12-20-2010, 04:53 PM
 
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Ok, so i'm not an expert but I do know something about it. Definitely get a lawyer involved. Definitely set a non compete of at least 10miles x 3yrs, otherwise if they open up down the road, the clients may follow them. Not sure if you can find one but a knowledgeable accountant should be able to help run the numbers from previous year gross and net production to make sure the business is not slowly dying, and that the price you offer is reasonable. Also, a good accountant and tax attorney will make sure you get the best tax advantage during the transition. Certain buy-over terms may give most tax advantages to the seller so make sure it's a good transition. Study demographics to see if that area has a lot of competition, is it growing or dying, why is the seller selling? Not sure how it works with your specific business, but i know a lot of businesses go through this process of appraisal, contract, etc...unless you already know how to valuate the business.
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Old 12-20-2010, 04:55 PM
 
724 posts, read 1,423,488 times
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Quote:
Originally Posted by chris_ut View Post
Depends on what kind or price range your talking about here if an attorney is warranted and how comfortable you are with legal documents.
You can find attorneys who will draft documents in plain language. Regardless of how comfortable you are, you are entering a major legal transaction and need to be protected. It is major because the topic is the livelihood for the buyer and likely the retirement for the seller. The seller will have legal documents. It would make sense to know what they say.

Finally, where are these one size fits all forms you mentioned were available for free on the internet?
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Old 12-20-2010, 04:57 PM
 
724 posts, read 1,423,488 times
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Quote:
Originally Posted by houstonfan View Post
Ok, so i'm not an expert but I do know something about it. Definitely get a lawyer involved. Definitely set a non compete of at least 10miles x 3yrs, otherwise if they open up down the road, the clients may follow them. Not sure if you can find one but a knowledgeable accountant should be able to help run the numbers from previous year gross and net production to make sure the business is not slowly dying, and that the price you offer is reasonable. Also, a good accountant and tax attorney will make sure you get the best tax advantage during the transition. Certain buy-over terms may give most tax advantages to the seller so make sure it's a good transition. Study demographics to see if that area has a lot of competition, is it growing or dying, why is the seller selling? Not sure how it works with your specific business, but i know a lot of businesses go through this process of appraisal, contract, etc...unless you already know how to valuate the business.
This is good advice.
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Old 12-20-2010, 06:31 PM
 
Location: Houston, TX (Oak Forest)
4,516 posts, read 11,311,550 times
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I never said there was a one size fits all, I stated that you will need to modify it for your purpose. It is easy to see what I said just scroll up a couple inches.
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Old 12-20-2010, 07:15 PM
 
724 posts, read 1,423,488 times
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I read that. It isn't a matter of just making small, minor modifications though. Each transaction will be unique and a cookie cutter form won't do.
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Old 12-20-2010, 08:43 PM
 
Location: Houston, TX (Oak Forest)
4,516 posts, read 11,311,550 times
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That is what I did when we sold my wife's business but to each their own.
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