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First Steps After Finding a Business Listing

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Steadfast and determined to find the business that suits your entrepreneurial vision, you’ve set aside the time necessary to research, define and refine your criteria for the business you’re going to purchase. After days, weeks or, even, months of using your criteria to effectively search acquisition opportunities, you’ve found a business that piques your interest—how do you act on it?

Your next step is to reach out to the seller’s advisor and ask for information. 

This stage of your search is centred around finding and reviewing acquisition opportunities. Stay optimistic and confident because reviewing is time-and-resource-consuming. Business buying isn’t a universal process. Each business acquisition is unique and comes with its own set of circumstances. Finding an intriguing listing, while exciting, doesn’t guarantee that your search has come to an end. 

Buyers enter a cycle of finding and reviewing a myriad of businesses before honing in on the one that receives a letter of interest. The more businesses you review, the more you’ll learn about the process and the better you’ll become at conducting preliminary reviews. 

*Tip* Remember to use your criteria in the review phase as well as the search phase. It may not be until you review a business that you realize the opportunity doesn’t suit your criteria. 

Requesting Business Information

If your target business is currently on the market—researchable via deal flow and business for sale websites—the business seller is likely represented by a broker or mergers & acquisitions specialist. In this case, you’ll reach out to the broker for information. If the business is not currently on the market, rather the opportunity presented itself organically through word of mouth, then the seller may not have a broker representing them. In this instance, you’ll contact the seller directly for information. 

Asking a Business Broker for Information

Step 1: Sign an NDA

Once you’re in touch with the broker, expect to receive and be willing to sign a non-disclosure agreement. NDAs are signed by both buyer and seller to protect a seller’s name and privacy and to honour the integrity of a business’ confidential information. 

 As a buyer, make sure to read the NDA entirely. If you’re uncomfortable or uncertain about signing the NDA as is, seek a trusted legal advisor for advice. 


Step 2: Request a CIM

With a signed NDA in place, the buyer can request in depth information about the business. Up until this point, you'll know limited information about the enterprise other than its general region, EBITDA, gross Revenue, years of operation and so on. 

Confidential Information Memorandums (CIMs) are broker-prepared marketing information packages that report vital information about the business. Buyers are provided CIMs to adequately review and evaluate a business. A CIM is not a legally binding contract, and the structure of a CIM can vary depending on the broker and company.

 Generally, CIMs report information such as: 

  • Company name
  • Company location
  • Company overview (history, mission and date of establishment)
  • 3 years minimum of company financials (Revenue, EBITDA Margins, Cash Flow, profitability)
  • Company assets
  • Market overview (size and growth trends)
  • Management structure
  • Employee profiles
  • Customer profiles 
  • Products and services details 
  • Day to day operation details
  • Financial projections
  • Software information
  • Vendor networks

Contacting a Seller Directly

Know What to Ask a Seller

In certain circumstances, sellers act independently and don’t have a broker representing them through the initial phases of acquisition. If this is the case, sellers typically don’t have a CIM package in place. Therefore, as a buyer, you’ll need to determine what information you require from the seller. 

What information should you ask for?

  • A detailed description of the business
  • 3 years of accountant prepared financials
  • Previous year’s tax return
  • Revenue by product service
  • Staff overview 
  • Management compensation
  • Discretionary or one-time expenses
  • Current contracts
  • Ownership or rental status of real estate
NDA contract
Customer service good cooperation, Consultation between a Businessman and Male lawyer or judge consult having team meeting with client, Law and Legal services concept.

Seeking Advisors During Preliminary Review 

Many first-time buyers find asking for information nerve-wracking. They’re either hesitant to approach brokers and sellers, or they don’t know what kind of information they’re entitled to. 

Engaging advisory support is essential when reviewing any businesses to purchase, whether seller represented or broker represented. 

Throughout the entire business acquisition process, a buyer will likely engage services with 7 or more advisors. Engaging advisors early in the review process solidifies a buyer’s ability to find the right professionals who will aid them not only through their due diligence but the entire acquisition process. 

Tip *Seek advisors who are specialized professionals with experience and knowledge in the business acquisition process. It’s best not to rely on your everyday advisors (i.e personal lawyers or accountants) as they may not be familiar with business acquisition.* 

Advisors to Connect With in the Early Review of a Desired Listing

Here are three advisor categories, along with examples of the professional advisors and services that you may seek in your initial stage of review.

LegalFinancialValuationBusiness law and
litigation lawyersCPA accountantsValuation specialistsReview, relay and revise stipulations of buyer/seller NDA contractsDevise NDA contracts for buyers to provide to independent sellers.
Analyze the target’s financial records to communicate cash flow, earnings, expenses or concerns such as monetary losses. Evaluate the target’s CIM to decipher opinion of company value. 

While buyers can hire brokers to help search for businesses, brokers still, first and foremost, represent sellers and not buyers. As the author of Buy Then Build, Walker Deibel, states,:

Brokers are not terribly incentivized to hold the hands of first time buyers…they are commonly looking for the biggest deals with the biggest fish.

Because buyers typically lack a true source for representation in the buying process, it’s not uncommon to feel confused and unsure of how to make headway in the initial stages of the business buying process. 

Advocating for you as a buyer, Village Wellth acts as your source of motivating representation throughout the business buying process, putting you in contact with trusted, specialized advisors. Likewise, Village Wellth connects interested buyers directly with business listing brokers to ensure that you’re able to request and gather information about businesses for sale as quickly as possible. 

an entrepreneur

Endorsing you along your acquisition path, Village Wellth calms buyer hesitation. Instead, we arm buyers with contacts, advisory services and assurance to communicate with the right professionals at the ideal time.  

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September 6, 2022
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