Steps to Buying a Business

No matter if you are just beginning to explore buying a business or if you have a precise, well-defined idea of what you want, we will guide you through each stage of the business search and acquisition process, answer your questions, and advise you when seeking outside counsel may be necessary.

Buying a business is a complex, multi-stage process. Once a business actually goes under contract, the rule of thumb is that it can take anywhere from 45 to 90 days before it closes. How long depends on the complexity of the transaction, the loan approval process, whether real estate involved, and a host of other factors.

If you have identified a good candidate in our portfolio, or if you just wish to learn more about doing business in New Mexico and opportunities that we currently have listed or are working to bring to market, your first step is to Contact Us. If you are planning to visit the area, we will invite you in for a conversation. If you currently live further afield, we look forward to scheduling a phone call to learn more about your goals

#1. Initial Inquiry

When you reach out to us about one of our New Mexico businesses for sale, we ask you to register as a business buyer and provide a summary of your financial data and other qualifications. You can also submit this data directly through our site at Business Buyer’s Registration Form.

Once we have reviewed your information, we request you sign a Non-Disclosure Agreement (NDA). An NDA protects the business’ on-market status from being disclosed to anyone without a direct interest in the transaction. If this knowledge were to become known to employees, competitors, long-time customers, vendors and the general , it could disrupt the business and undermine its market position.

Complying with an NDA also helps to establish goodwill between the parties involved. It ultimately protects your future investment as well.

#2. General Review

We will provide you with a Business Summary containing highly confidential, detailed information that identifies the business and provides a summary of its history, assets, and financial information for the last three years. Reviewing the Business Summary allows you to make an informed decision as to whether you wish to continue to pursue this opportunity.

#3. Confidential Visit

Once you know the identity of the business, you can make a confidential visit if it is an open-to-the-public operation, such as a restaurant, retail store, beauty salon or similar enterprise. This allows you to observe how staff interacts with clients, the foot traffic, and the business’ over all presentation.

Do not be overly alarmed if not everything you see delights you. These shortcoming can simply signify areas that require further clarification as the sales process moves forward.

#4. Meet with Seller


We invite the Buyer and Seller into our office for a face-to-face meeting. Sitting across the table from one another is often an effective, efficient way to come to a mutual understanding of the parameters for moving forward.

We facilitate the conversation to keep it focused and prevent it from straying into highly detailed areas best addressed at later stages in the transaction. We help both parties clarify their interests and goals in the transaction.

If an in-person meeting is unfeasible, we can facilitate the conversation and assist with drafting a Letter of Intent (LOI) for review by you and your advisers.

#5. Issue a Letter of Intent

buy-a-business-photo-6A Letter of Intent is a preliminary purchase agreement that is contingent upon your review and findings during the due diligence phase. It is not a binding purchase contract, but a tool to help you and the seller quickly and efficiently determine whether, and under what general conditions, you will enter into a binding Asset Purchase Agreement (APA).

It describes the business, identifies its assets and exclusions, and sets a purchase price and payment terms. We can make a sample LOI available for you and your legal adviser to review and modify to fit your needs.

#6. Conduct Due Diligence


During due diligence, you will work with your legal and financial advisers to uncover everything you need to know about the business before you purchase it. This is your opportunity to ensure your money is being well spent. Your accountant or CPA will examine the Seller’s P&L statements, tax records, any insurance claims, lease agreements, and other financial statements and documents.

If you find a discrepancy between what you were told and what you discover during due diligence, it is simply something to clarify and work through.

#7. Finalize an Asset Purchase Agreement

buy-a-business-photo-20What you learn during the due diligence phase will help you negotiate a final Asset Purchase Agreement (APA). This binding contract details the scope of the purchase, the terms and conditions of the sale, and sets a closing date.

It may take several conversations and exchange of offers to come to an agreement with the seller, but realize that this is a normal part of the process. We will facilitate the crafting of the APA so both parties know when to bring in their legal advisers to ensure their best interest are protected in the final, executed version.

#8. Complete the Financing


While you should have already been working with a loan officer (see Financing Your Business Purchase), an executed APA is a vital to completing the loan. Your loan officer will guide you through the process and inform you of any additional steps or capital requirements.

#9. Closing

At the closing, the Seller will provide you with:

  • Vendor and Client lists
  • A Lease Assignment
  • A Non-Compete Agreement
  • Title to Assets
  • Other information needed to effect closing

#10. Training & Transition


After the purchase is complete, most sellers will work with you to ensure a smooth transition. Their help allows you to begin to learn the intricacies of the business. The seller’s presence also provides stability. It helps your regular customers to feel comfortable with the transition, and the consistency reassures your employees.

You can put your own signature style on the business, but it is wise to resist making immediate sweeping changes. The transition period offers you the opportunity to observe, evaluate, and clarify the new direction, if any, you wish to take your business.