The BizBuySell Small Business Community

  • Get Expert Advice

  •  • Find Local Service Professionals

  •  • Share Your Experiences

How to buy a business

Hi, this is a rather simple question built out of a bit of frustration. I saw a coffee shop for sale that I was truly interested in and contacted the business broker who had the listing. I mentioned my interest, that I have financing (would have done all cash) and so on. I also mentioned that I need help evaluating this business. I got zero input other than it's a great business in a great location. What use is a business broker when that's the service I get. I had to do all of my own research to determine the questions to ask, and then he attempted to answer them, though most he did not have answers for.

So this may be quite an open ended question, but really how does one go about evaluating and buying a business?

K Larsen

Answer This Question

max 5000 characters

Web Reference (optional)

e.g., ""

Review Community Guidelines

Help keep our Community clean and on topic. The BizBuySell Community is a place where you can discuss your questions, concerns and knowledge with others you can trust. It is not OK to use this forum to solicit others for personal or financial gain, or to rant about personal issues. It's all in the guidelines.

Submit Your Answer
Answers (3)
No User Photo
The BAF Group LLC

I am not certain I would call it an "amateur mistake". Business Brokerage is an odd culture. As a Buyer, you would not normally use a Broker to run interference for you. When we act as Buyers' representatives, it is normally for larger, corporate Buyers. If it were a Real Estate Broker, Buyer's Agents are welcomed and the listing Broker would normally share commissions with such a Buyer's representative. In Business Brokerage, the vast majority of Brokers do not do that. And I personally believe that Brokers who do not cooperatve with Buyer's Agents make a big mistake and do a disservice to their Clients, who are their Sellers.

What I am saying is that, if you (as a Buyer) have a professional Accountant and Attorney to call on, you do not necessarily need your own Broker. You can begin the search process as you have, as long as your due diligence process is aided by these other counselors.

Good luck to you!

Nov 10, 2011
K Larsen
Albany County, NY

Ah, such a simple and amateur mistake, but your response makes a lot of sense. Given that I wasn't represented by my own business broker, I contacted the selling broker directly. I just assumed that brokering both sides is fairly common and wouldn't cause too much of a conflict. The business has since sold and I regret not making a strong run at it. I will be better prepared next time. Thank you for your response.

Nov 10, 2011
No User Photo
The BAF Group LLC

As a Broker, there are two sides to your question, in my view. First, I think it sounds - and I am only getting your side - that the Broker did a lousy job. If he did not have answers to your questions, he should have found them!

On the other hand, keep in mind that in this case, he was really representing the Seller - not you. This does not mean he has no obligation to tell you everything he knows about the business, or to get you the information you require that would allow you to make an intelligent decision. But in terms of helping you evaluate the business, that is not his job. Again, he needs to give you the information to allow you to evaluate it; but if he were to evaluate it, or help you in doing that, he could later experience a liability for leading you in an erroneous direction, for the sole purpose of lining his own pockets.

A Broker who represents the Seller should provide you with a wide array of financial information, and answer qualifying information that you can use to make up your mind. To fully evaluate the business, the first person for you to contact is an Accountant that you trust, and who is experienced in acquisitions. Next, you may want to talk to others who have been in the same business and bounce the information off of them, to see how their expereinces can provide further insights. (If you have signed a Non-Disclosure Agreement, you need to be extremely careful not to run afoul of that Agreement!) Then, an Attorney should be contacted to determine what legal issues might be involved with this kind of purchase, and what you need to do to prepare yourself for setting up your own company.

I hope this sheds some light on the problem; and I apologize that you had a difficult time with your attempted purchase.

Nov 8, 2011

Start a Discussion