Businesses are bought and sold everyday. Each transaction is unique, yet there are fundamental elements to the purchase process that are common. The purpose of this article is to highlight the sequential components of a typical business purchase plan. Whether you are a first time business buyer, or a veteran business acquisition specialist, it is imperative to understand the evolution and eventual structure of a business purchase transaction.

Purchasing a business is an iterative process. There are logical and cost effective steps that need to sequentially followed to maximize eventual purchase success and minimize cost. For the business buyer the ultimate goal is to find and purchase a viable business for a fair market price, acquired via most favorable purchase terms. Following these sequential steps will get you there:

1) DEVELOP YOUR PURCHASE CRITERIA:

Define all relevant criteria to qualify a business for purchase

2) ESTABLISH YOUR "BUYING TEAM":

A variety of skill sets and expertise will be needed to cost effectively locate, evaluate, structure, valuate, fund and negotiate an equitable purchase agreement

3) DOCUMENT YOUR PROFESSIONAL "CREDITABILITY":

Providing a written summary of your professional skills, experiences and successes of your entire buying team will fortify your image with any business seller you approach

4) FINALIZE AND DOCUMENT YOUR FINANCIAL RESOURCES:

Every business seller will want to quickly qualify your financial wherewithal early on in the mutual evaluation process. Secure your finances and document your capabilities.

5) EDUCATE YOURSELF ON BUSINESS PURCHASE TERMS AND CONDITIONS:

Take the time prior to your first business pursuit to educate yourself on as many common business purchase terms and conditions as possible. Understanding your purchase deal structure alternatives will maximize your negotiation effectiveness.

6) DEVELOP A COST EFFECTIVE MEANS TO LOCATE VIABLE BUSINESSES FOR SALE:

Decide if you are only going after businesses that are "for sale" or those that can be bought. Establish a variety of means to define these businesses.

7) UTILIZE NON-BINDING LETTERS OF INTENT:

If you find a viable business you like, document your intentions, intended deal structure and what exact information you need to start your purchase due diligence.

8) EFFECTIVELY ANALYZE ALL DOCUMENTATION PROVIDED BY THE SELLER:

Analyze all financial and non-financial documentation provided as a response to your Letter of Intent. For subjects that are beyond your level of expertise, acquire appropriate professional assistance.

9) IMPLEMENT A STRUCTURED DUE DILIGENCE PROGRAM:

Validate provided information, research appropriate target markets, gather data on key customers, employees, patents, legal encumbrances, leases, purchase contracts, pending legislation, key suppliers and technology trends.

10) UTILIZE PROFESSIONAL, 3RD PARTY BUSINESS VALUATION SERVICES:

Contract with a certified business valuation consultant to define a fair market value, and equitable purchase term structure for the business you seek to buy.

11) INVESTIGATE ALTERNATIVE FINANCING ALTERNATIVES:

Based on a valid business value determination, seek and define as many ways you can to purchase a controlling interest of the business with as much of other people's money as is reasonable.

12) PRESENT YOUR FINDINGS TO THE SELLER AND NEGOTIATE A DEAL:

After your due diligence is completed, document your key findings, organize your information and present your case to the business seller. Hire a credible 3rd party negotiator or do it yourself.

13) DOCUMENT THE AGREED UPON PURCHASE TERMS AND CONDITIONS, SET A DATE:

Put everything agreed to in writing. Finalize the purchase agreement, have your legal counsel review it. Both buyer and seller sign a Letter of Intent, committing both to the agreed upon purchase terms and to set a date and time to close the deal.

14) SIGNATURE OF FINAL PURCHASE DOCUMENTS:

If the deal is an equitable one and both parties have conducted themselves in a constructive and honest manner, this should be a "joyous" occasion for both parties and their representatives.

Today's successful business buyer is a disciplined person using a definitive process to find, qualify, value and negotiate for purchase viable business acquisitions. If a business buyer has a written purchase plan, any number of other supportive people can effectively participate, understand their role and contribute to the buyer's overall business purchase process and objectives.

If you understand the fundamental steps involved in a typical business purchase process you are well on your way to being able to effectively write a plan you can use to meet your personal business acquisition goals.