The Buying Process

The Buying Process

When you work with a Chinook Mergers, Acquisitions & Business Brokerage Intermediary, the task of buying a business is so much simpler. Even so, there are many factors to be considered.

How Chinook Will Assist You

People working at table

  1. You will be required to sign a Confidentiality or Non-Disclosure Agreement.
    • This helps us to ensure the confidentiality aspect of buying and selling a business.
    • We will request an initial meeting to detail the specifics of your buying or selling criteria.
    • You will be asked some basic questions about yourself so that we can develop an accurate profile of your goals and expectations – this will include 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.
  2. 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 confidentially that the business is for sale.
  3. If you are satisfied with the results of this meeting, and interest is still high, you are at a point where we can assist you in preparing an offer or to request further information.
    • At this time, any reasonable request for additional information will be honoured. 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 honouring 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 therefore may restrict some of the information they are willing to provide to you until they determine the seriousness of your interest.
  4. 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.
    • Such an offer is typically a conditional offer or in the form of a Letter of Intent (LOI). It will also contain specific requirements by the Seller as far as training and transition and non-competition clauses.
    • A reasonable deposit based on the purchase price will also typically accompany the offer. This deposit will be made to our trust account, similar to the purchase of real estate, with a cheque to your lawyer’s trust account.
    • This amount is often increased after subjects and/or contingencies are removed. The offer typically would also contain 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.
  5. Upon removal of all subjects and conditions the offer now becomes firm and binding.
    • At this time, often the deposit is increased as noted earlier. Naturally, these 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 drafting 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 drafted by the Buyers lawyer and typically costs around 2% of the purchase price. This may vary substantially based on your lawyer, location, business, extent of back and forth between lawyers, negotiations, etc.
    • Buyer and Seller are typically responsible for their own respective legal costs.
  6. 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 Chinnok will be responsible for managing the transaction to a successful close.
  7. 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 of sale of premises (if applicable), vendor notes, security agreements etc. are also executed.
  8. You are now the proud owner of your new business.
  9. 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 process to ensure your satisfaction with the agreement.