Tools > Process
Phases of Buying A Business
Buying a business is a complex and time consuming process that can be broken down into four main phases.
Phase I: Confidentiality Agreement
Signing this document gives you access to sensitive
information regarding the seller and their business. It
also protects the seller by ensuring you will keep
information disclosed during negotiations confidential.
Phase 2: Preliminary Negotiations/Letter of Intent
Both parties negotiate a letter of intent, which is non-binding and forms the basis for the
definitive agreement. It outlines the deal structure, the purchase price and form, payment terms
and closing contingencies. Example
Phase 3: Due Diligence
due diligence - this vitally important phase - you will examine the
business background, finance, human resources, tax and legal matters.
Phase 4: Negotiation/Definitive Acquisition Agreement
There are four main sections of the Definitive Acquisition Agreement: purchase price, representations,
indemnification and covenants.