13 Feb Business Buyer’s Frequently Asked Questions – FAQ (part of the How to Buy a Great Business Series)
– What is the meaning of the expression »Lender PreQualified« (stated many times in listings)? It usually mean a bank has agreed to ‘consider lending money for the businenss, often with, the SBA backing (small business administration). It does NOT mean that the lender has APPROVED it! It sometimes mean the Seller is willing to consider financing the sale without a bank.
– What is meant by »Contract Pending« (stated many times in listings)? Contract Pending means someone is in the process of trying to buy the business, and usually has made a written offer that has been accepted by the Seller, but, since deals have been known to fall apart, the business might be a consideration. If you really like a buisness that is under contract, you can always offer a ‘back-up contract’ to be next in line just in case the current deal falls through.
– What is meant by »The site is currently under contract with a Buyer in place« (if the business is listed for sale)? Often agents don’t pull the businss off the market until it is sold since the deal can fall apart. If you have an interest, reach out to the listing agent or owner.
– When business is for sale (like many Gas Stations w/ convinience store), does this means that the company (legal entity) as corporation (STOCK SALE) is for sale (or just rights to make a new rental with Landlord (ASSET SALE but more that ‘just right to make a new rental – you getting branding, goodwill, cash flow, customer database, inventory, reputation, training and orientation….)? Typically the business sells as an Asset Sale as opposed to a Stock Sale