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    Search Glossary of Business Terms

 

1. A meeting is held between the Seller and the Seller’s Broker (who holds a Real Estate license where necessary and is professionally-trained).  The Seller, meanwhile, is adequately educated on the business-selling process.
    

2. The Seller’s Broker fills out a Representation Agreement, which is then signed by the Seller. 
    

3. Upon the Seller’s signing of the Representation Agreement, the Seller provides the Seller’s Broker with the following:

i.        A complete listing of all equipment and assets to be included or excluded in the sale.

ii.       Profit and loss statements, tax returns, and balance sheets of the business (covering the last three years in entirety).

iii.      The most recent available interim profit and loss statement, sales tax returns, and balance sheet.

iv.      Real and personal property leases.

v.      Copies of all licenses, patents, contracts, loan documents, and agreements (e.g., employee benefits).

vi.       Any environmental reports.

vii.     Copies of all other documents needed in order to present an honest and accurate description of the business to prospective buyers.
 

4. During the Representation Period, the Seller is required to update each aforementioned document when any material change has occurred. 
    

5. The Seller agrees to the Seller’s Broker publishing, advertising, or distributing information about the business to prospective buyers, cooperating brokers, and landlords.  Seller also consents to Seller’s Broker contacting landlords or any other relevant persons regarding any additional information about the business.
    

6. Seller’s Broker creates a narrative of the business.  The Representation Agreement is then submitted to the WORLD SOURCE proprietary database, and a Business Profile is created.  Seller’s Broker introduces the business to other brokers during office meetings, which are held weekly.
    

7. Seller’s Broker develops an advertising strategy, and the Seller’s Business Data (SBD) (which has been matched against buyers in buyer’s respective queues) is added to web sites in a way so that the general public is unable to identify the business.
    

8. Buyers in queue and those who have responded from the advertisements will have their financial histories and backgrounds evaluated to determine if they are qualified to buy the business.  If qualified buyers are interested, they will be shown the Business Profile.  If further interest is then shown, the Seller’s Broker will arrange a meeting with the Seller.
    

9. If buyer decides to make a reasonable offer, the buyer’s broker will present the offer and secure a deposit.
    

10. The Seller’s broker will then present the offers to the Seller.  Seller and Seller’s Broker will review each offer and decide whether to accept it or counter it.
     

11. Once an offer is accepted, the Seller’s Broker will arrange a meeting between the Seller and the buyer where the Seller’s and buyer’s Disclosure Statement can be discussed, questions can be answered, and the statement is signed by both the Seller and the buyer.
     

12. Once the Seller’s and buyer’s Disclosure Statement is completed, due diligence begins.

i.         If the due diligence shows the business to be as originally presented, the buyer will sign the Conditions Removal.

ii.        If the due diligence does not show the business to be as originally presented, the offer can be renegotiated or the offer can be cancelled and the buyer’s deposit check will be returned to the buyer.

iii.      If the due diligence shows the buyer to be as originally presented (financially capable, good credit, etc.), the seller will sign the Conditions Removal.

iv.       If the due diligence does not show the buyer to be as originally presented, the offer will be canceled and the buyer’s deposit check will be returned to the buyer.
 

13. Once both the buyer’s and Seller’s Conditions Removals are signed, the Seller’s Broker will prepare to close the deal.
     

14. Seller's Broker secures the following:

i.         Representation Agreement.

ii.        Purchase Agreement and counteroffers.

iii.      Both Conditions Removals.

iv.       Seller’s name, personal address, Social Security number, sales tax number, and federal tax identification number (if a corporation).

v.        Buyer’s name, personal address, Social Security number, and federal tax identification number (if a corporation).

vi.       Deposit check from buyer.

vii.     Leases (e.g., amount of monthly rental, security deposit, assignment, new lease, etc.)

viii.    Estimated closing date, date of possession by buyer, and pro-ration date.

ix.       Insurance investigation; determination of whether the buyer will assume Seller’s insurance or acquire new insurance.

x.        Taxes (requests the Seller’s property tax bill for pro-ration).

xi.       Required licenses; determination whether they are transferable.

xii.     Names of officer(s) authorized to sign a Corporate Resolution authorizing the sale of the assets or stock (if buyer and/or Seller are a corporation).
 

15. Purchase price will be allocated in the following manner:

i.         Good will; fixtures and equipment; leasehold improvements; covenant not to compete; licenses where applicable; Furniture, Fixtures & Equipment (FF&E); Inventory.
 

16. Asset sale through an escrow company:

i.         Receives opening escrow instructions.

ii.        Prepares escrow instructions.

iii.      Gathers signatures and deposit money (no escrow processing will begin until the deposit check clears).

iv.       Orders publication and recording while notifying county tax collector.

v.        Orders UCC, tax liens and judgment search for state and county.

vi.       Requests demands from existing lien-holders.

vii.     Receives claims.

viii.    Before the legal published closing date, does estimation of closing costs (including estimated inventory), and requests funds to close escrow from the buyer.

ix.       Prepares closing instructions one day before the close of escrow.

x.        Gathers signatures on the closing instruction on the date of close of escrow.

xi.       Disburses funds and paperwork.
 

17. Stock sale through either an escrow company, the Seller’s Broker, or a “neutral” attorney.

i.         Orders UCC, tax liens and judgment search for state and county.

ii.        Arranges for signature changes on banking accounts, name changes on liability accounts, and preparation of new stock certificates.

iii.      Before the legal published closing date, does estimation of closing costs (including estimated inventory), and requests funds to close from the buyer.

iv.       Gathers signatures on the closing instruction on the date of close.

v.        Disburses money, stock certificates, and paperwork.
 

18. Tax releases are required before the Seller can receive all of the proceeds, including a Certificate of Payment of Sales and Use Tax from State Board of Equalization.