When you work with a Chinook Business Intermediary, the task of buying a business is so much simpler.
How Chinook Will Assist You:
- By signing a Non-Disclosure Agreement we ensure the confidentiality aspect of buying a business. Our initial consultation meeting will detail the specifics of your buying criteria. Determining your goals and expectations will allow us to develop an accurate profile to achieve your objectives – including an assessment of your ability to finance and operate the type of business you have in mind.
- We will then review businesses that match your criteria, each presented with a Confidential Business Profile (CPB) that contains key decision-making information from market and industry data to the gross margins and other financial information.
After your assessment and decision to proceed, a meeting is arranged to view the business and to meet the Seller with your questions. Typically, this is a discrete visit arranged after hours to preserve the confidentiality that the business is for sale.
If you are satisfied with the results of this meeting, and interest is still high, we can assist you in preparing an offer or request further information.
- At this time, any reasonable request for additional information will be honored. However, due to confidentiality issues, some information may not be released until after your offer has been presented and accepted. Your Chinook Intermediary will be able to best determine the conditions of honoring your information requests.
- One needs to realize that an offer is just that: an offer. And, offers are typically subject to many contingencies. A seller may restrict some of the information, they are willing to provide to you until they determine the seriousness of your interest.
Your offer, when prepared by a Chinook Intermediary, will adhere to our standard format that provides for your protection throughout the offer process. Chinook will also know what is likely to be agreed upon by the Seller, thereby avoiding much back and forth. However, you should expect some typical negotiations in the process. An initial offer is typically a conditional offer or in the form of a Letter of Intent (LOI). It will typically contain:
- Specific requirements by the Seller for training, transition, and non-common clauses.
- A reasonable deposit based on the purchase price. This deposit will be made to our trust account, similar to the purchase of the real estate, with a cheque to your lawyer’s trust account. This amount is often increased after subjects and/or contingencies are removed.
- Other contingencies such as a due diligence period, deadlines, and a closing date. The due diligence period allows you and Chinook the opportunity to verify and review all the information given to you including that which may have been withheld prior to your offer.
Upon removal of all subjects and conditions, the offer becomes firm and binding.
- At this time, often the deposit is increased as noted earlier. Deposit amounts are fully applied against the purchase price.
- The details of your accepted offer or LOI is now forwarded to both parties lawyers for dragging and review of the definitive agreement.
- The Definitive Agreement is the actual agreement of purchase and sale and typically includes all the conditions and clauses in the original offer or LOI, as well as the intent and other clauses typical of the type of purchase and sale agreement.
- This agreement is typically dragged by the Buyers lawyer and costs around 2% of the purchase price (cost varies based on lawyer, location, business, negotiations, etc.) • Buyer and Seller are typically responsible for their own respective legal costs.
The Chinook intermediary will work with both lawyers and any professional advisors who may become involved to ensure that all details concerning various forms, applications, directions, assurances, releases, assignments, instruments, etc. are detailed to your satisfaction. It is important that you identify this to your advisors and lawyers so that they know Chinook will be responsible for managing the transaction to a successful close.
Once the definitive Agreement has been accepted by both legal counsels and agreed to by you and the Seller, all parties are ready for the closing.
- During this time, any other agreements such as non-compete agreements, training, and transitions, lease or sale of premises (if applicable), vendor notes, security agreements, etc. are also executed.
You are now the proud owner of your new business.
Often there can be an adjustment period that is specified in the definitive Agreement where some of the funds will be held in trust pending final invoices being settled and other similar adjustments.
If the seller has agreed to provide proper training, your Chinook Intermediary will monitor the progress of this the process to ensure your satisfaction with the agreement.