Buying A Restaurant- Continued

Offer

With your broker's assistance using a purchase agreement, you will submit an offer with a deposit to acquire the business. Your offer will be contingent upon your physical inspection of the business, your inspection of the financial records, the assignment of the premises lease or negotiation of a new lease and any other necessary contingencies (i.e. alcohol license transfer or other special licenses, financing, etc.).

Presentation: The broker will present your offer to the seller. We give the seller background information on you, your previous experience, your perspective on how you arrived at your price, terms and conditions, etc. We also present your financial statement, credit report, resume and business plan.

Response: The seller will either accept, reject or counter your offer. The broker will notify you of the seller's response. At this point you may either accept, reject or counter the seller's response.

Mutual Acceptance: When both parties agree to all of the terms and conditions of the sale and sign all amendments and counteroffers, the offer then becomes a purchase agreement signed both ways. At this time there may be contingencies or conditions that still need to be satisfied prior to closing.

Advisors: Brokers often encourages you to include your CPA and/or your attorney in reviewing the transaction should you feel the need to do so.

Escrow

Deposit: Your deposit check (made payable to the escrow company) is deposited and this opens the escrow holding account. The broker often will provide the escrow officer with copies of all documents relating to the sale.

Inspection: You will be given copies of the financial records of the business for your review.

Contingency Removal: As your requirements are met existing contingencies in the purchase agreement are removed. Once all contingencies are removed the purchase agreement becomes a binding agreement and the deposit is increased and the escrow is opened.

Closing Date: The closing date or the close of escrow is the date when title to the business and normally physical possession of the business is transferred to the buyer. The closing papers are signed in the title company's office or through the mail prior to the closing date.

Inventory: Arrangements are made for you and the seller and/or inventory service to take a physical inventory as it applies to the value of the saleable items (food, beverages, etc.) and non-salable items (fixtures, equipment, etc.) usually one or two days prior to the close of escrow.

The Closing: All parties meet at the escrow office to sign the closing papers or the closing papers are sent to the parties to be executed prior to the close of escrow.

Fees: You will generally be responsible for your own accountants and attorney's fees, half of the escrow fees, security deposit for the premises lease and sales tax on the value of the fixtures and equipment that you allocate as part of the purchase price.