About a month ago, I got a call from Dr. James. He was ready to buy a dental practice. He has a loan from his parents and 2 business partners.
He and the seller had already signed a letter of intent and one of them got a form business purchase agreement online.
They wanted to close the deal on December 31! (no, 2 weeks is not enough time to do a proper business purchase, regardless of the holidays)
He was calling me about drafting a partnership agreement for him and his partners because he thought he could handle the business purchase himself. But as I delved more into the situation, it became clear that he really needed more immediate help with the business purchase, and we decided to put off the partnership agreement until after the closing.
We are still working furiously together to get it closed, hopefully by the end of this month, and I’m doing my very best to reduce risk for James as much as possible, even though he had already given up some leverage by the time he brought me in.
Here’s the thing. Everyone thinks that just because it’s a small business, it’s something that’s easy and can be done very fast. The reality is, yes, you can do it fast. But you’d have to give up a lot of value to do that.
It’s like anything you do in life, like buying a house or a car. If there’s an emergency and you just have to buy something – anything – you know you’ll probably get a bad deal but you don’t care. But if you do care, and you want it to be a good deal for you, you’ll take the time to do it right.
It’s the same thing when buying a business, only more so. And really, when would you ever have an emergency need to buy a business? Probably never. When buying a business, there’s a step-by-step process that works. It’s not that different from buying a house, but it’s just more involved.
Be sure to get your advisors lined up early and budget enough time to get it done right.