After finding a suitable turnkey business, drafting a Letter of Intent, and signing a Purchase and Sale Agreement, the prospective business owner has completed almost all of the steps necessary to owning his or her own small business. Before the company can change hands, however, there are a number of procedures that the entrepreneur must make sure to complete.
Before a business deal closes, the soon-to-be business owner must ensure that all pertinent loans are approved and that financing is secured. Loans and capital backing falling through at the last minute is not an unknown in the business world, so double and even triple checking the financial backdrop to a deal is always a wise idea.
Additionally, the soon-to-be business owner must ensure that all contracts and agreements are legally sound, and that there is no ongoing litigation regarding the business deal. Lawsuits or legal challenges that crop up early on in the process of buying a business often foreshadow future legal problems, or ongoing difficulties with previous owners.
Finally, the soon-to-be business owner must ensure that a due diligence investigation is completed satisfactorily (due diligence is covered in the next chapter). A thorough investigation of the potential business can either exonerate a company of any suspicion of financial or criminal difficulty, or can reveal lasting problems. In either case, this analysis of the company is invaluable.
