If you are thinking of purchasing a business doing a little work up front can make you desired by sellers and brokers alike. Here’s how…
Start by creating a file to give to either a seller, a broker or a banker. This file should contain your last three years of personal tax returns and a current bank statement/retirement account statement showing you have the resources to purchase the business. Additionally, you should purchase an updated copy of your credit report. The entire report is not necessary, but the front page showing your name and FICO score will suffice. This can be purchased from a website such as Experian.com. Remember, you will be asking for the seller’s financial information so you should expect to provide yours as well.
Next, take this file to the bank you have a relationship with and ask to speak with someone in their commercial lending or SBA department. Tell the bank representative your plans for purchasing a business and ask to get pre-approved. Although this is NOT a guarantee, it will save you time later in the buying process and it may give you a significant advantage over a competing buyer. Having a pre-approval letter along with your personal financial documentation will make every seller and every broker stand up and take notice. Not only will they take you more seriously, but it may very well move you to the front of the line while other buyers scramble to obtain this information for themselves.
Written by Brian Reifer, Partner