How To: Close the Deal When Buying a Business

Signing Your Life Away

Try to ignore those cold feet of yours. All that hopefully remains is for you to affix your signature to all the documents and paperwork you'll need to make your ownership official, a list that will include things like:

• Lease assignments
• A promissory note to your lender
• An agreement to cooperate with the seller.

Your lawyer will also have you and the seller sign documents attesting to the fact that the business's assets are now free and clear. At the same time, your accountant will have you sign the purchase price allocation agreement, a document that breaks down the value of the company's tangible assets like inventory and contracts and intangible assets like good will. How those numbers are allocated will determine how much tax each you and the seller owe based on the transaction, so, when possible, let your accountant negotiate the relevant terms with the seller's accountant to minimize any further negotiating tension. This also speaks to the value of having third-party representatives like brokers to help speed the end game along, says Andrew Rogerson, a business transfer agent with Murphy Business, in Sacramento, California.

As much as you might have tried to iron out wrinkles with the seller before now, though, you may need to be prepared to deal with a few more. That's why Berg recommends that as one of the first things you do when you show up at the close is to put down a cashier's check or equivalent right in the middle of the table, just where the seller can see it and stare at it. "I often find that when a seller sees their money, they become much more conciliatory when it comes to finding middle ground," he says. After that, of course, it's safe to pop open that bottle of champagne.

Post-Mortem: Prepare a 30-day Plan

As a new business owner, there are a series of steps you should take within the first month to start your new investment on the right foot.

• Take care of employees:One of your first priorities should be to set up an introduction with your employees, most of whom might have had little or no clue about their status during the negotiation process. It can also be a good idea to give your employees, especially your those you identified as being most valuable during the due diligence phase, a raise after the first 30 days following the sale to show how much you value them and want them to stick around. You can use this time to "interview" your new employees, asking them for input and ideas about how they might help the company grow into the future. These can also be good opportunities to gauge how well new employees will fit into your vision of the company.
• Learn what you can from the seller:Depending on your agreement with the seller, you will also have between 30 and 90 days in which the seller will serve as a consultant to help the new buyer through the transition of learning how to operate the business. But, again depending on your agreement, you might also have the opportunity to hire the seller for an extended period of time -- particularly if the seller financed part of the price or if they have an equity stake in the future profits of the business.
• Meet the firm's key customer and business partners:During that first 30 days, it will be critical to work with the seller to get introductions to all the firm's key clients, vendors and suppliers. It is through these meetings that you'll be shaping the future course of your company.

After the first 30 days, however, once you've grown comfortable in your new role, you'll most likely look forward to taking the reigns yourself and doing some thing your own way. As Peter Siegel, founder of USABizMart.com, says, "You're moving into growth mode while the seller is sliding into golf mode."