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Frequently Asked Questions About Buying a Business

Why should I buy a business instead of starting my own?
When you acquire an existing business in Michigan, you can find one with existing cash flows. In this case, the owner has years of proven net income compared to a start-up which has none. Also, the investment in starting your own business can often be greater than the down payment on an existing profitable business. And statistically, the risk is higher when you start your own business. Existing businesses provide a window for you to see what works and what can be improved. If the location is established and employees are in place, you’re likely to receive a quicker return on your investment.

Why should I use a business broker to buy a business in Michigan?
Brokers can introduce you to many more businesses than you would find on your own, they have the expertise on many ways to structure an offer, protect you with the proper contracts, open your possibilities for financing and access to capital, and act as a facilitator between the buyer and seller for a smooth transition of the business.

Why should I choose First Choice Business Brokers of Michigan?
First Choice Business Brokers offers a nationwide network of offices in locations with great opportunities, like Michigan. The Michigan office brings personal experience in business acquisition and ownership as well as expertise in business valuation, business sales, business marketing, buy/sell negotiations and real estate related to business sales. We can even assist with retirement rollovers and E-2 visas as they relate to business acquisition.

Will I be able to obtain financing to buy a business?
Funds are definitely available. Of course, a lot depends on the borrower and the business. If you haven't begun to explore financing or feel you don't have options, save time and contact First Choice Business Brokers of Michigan and let us help you answer this before anything else. It is in our best interest to determine how you can buy the right business with the right financing and we know the options and the pros and cons.

How do I make an offer on a business I want to purchase?
You'll use our time-tested, expertly-crafted agreements to write an offer. Keep in mind that there are no statewide associations or Michigan state departments that oversee business brokerage and dictate the contracts to use.  Our agreements cover everything from the basics to more complex issues that we’ve encountered over the last 20 years. First Choice Business Brokers will also be in touch with the Michigan business owner to understand deal structures that may work for both parties.

What is due diligence?
Due diligence is a key step in the buying process that is like an inspection period. It starts after the Buyer's offer is accepted by the Seller and allows the Buyer to go much deeper than during the initial discovery. The Buyer puts forth a deposit which resides with a third party escrow company. If the Buyer is not satisfied during due diligence, the Buyer can walk away with their deposit returned to them.

How does a seller come up with the asking price?

If the seller is represented by a business broker, the price probably reflects one or more industry-suggested pricing methods. For example, the price may be based on a multiple of income or a combination of income and assets. First Choice Business Brokers utilizes a proprietary Market Price Analysis (MPA) when helping Sellers and Buyers. This is a robust tool that takes more factors into consideration, but is ultimately market-driven.

Aren't most businesses for sale losing money?
The fact is, most business that are losing money are not able to be sold. Most of the business listed for sale are listed because there are real profits. Michigan Sellers often sell because they are ready for retirement or a new challenge, are relocating, want to dissolve a partnership, or are simply just tired from working in the business. We can guide buyers to consider or uncover opportunities and hidden potential.