How I bought My First Business : A Lesson In Business Acquisition

How I bought My First Business : A Lesson In Business Acquisition

Part II

Over the years, I had learned how to study the newspapers and identify lucrative deals. But in the early 1990's, I used to scan the New York Times business sections for deals. I had gotten use to calling owners of various businesses and negotiating with them with the intention of buying. But my efforts were not fruitful. So as soon as I moved to Atlanta, I put the ideas into action. Prior to moving to Atlanta from New York City, I had studied the Dry Cleaning and Laundromat business and I knew that it was a lucrative business and the cash flow was excellent.

In Atlanta, I started studying the Atlanta Journal Constitution (The Business Section) and identified a Laundromat for sale. I immediately called owner and negotiated a deal to buy the Laundromat. The interesting thing is that I was able to negotiate and acquire the Laundromat without any bank financing. How was I able to acquire the business without bank financing?

Through my numerous mentoring program and entrepreneurship studies and research, I have discovered that you can purchase a property without bank financing. I also learnt that it is possible to acquire a business without possible bank financing and for the owner to carry back the financing. So during the negotiating to buy the property I asked the owner to finance the deal and he agreed to finance the purchase with a down payment.

In buying a business it is advisable to conduct a due diligence process. What is a due diligence? This is term used for a number of concepts, involving an investigation of a business prior to signing a contract. We audited the financial statement of the company and evaluated any legal matters that could affect the business. I decided to go ahead after I was satisfied with the due diligence.

I hired an Attorney to write the purchase and sale agreement and put everything together. It was a well written Agreement with a lot of protective clauses to protect my interest. In due course the contract were signed and I became the proud owner of a Laundromat business. I set up an S-Corporation to manage the business. It was an exciting learning business, buying and managing my own business.

Owner financing the deal was very advantageous:

1. It was a faster way to finance my purchase - the bank would have taken forever to approve the loan -

2. There was less red tape in terms of the paperwork required

3. It had a greater freedom to run my business

4. Future source of financing if needed.