A Step by Step Overview of the First Time Buyer Process
A recent article on Businessbroker.net entitled, First Time Buyer Processes by business broker Pat Jones explores the process of buying a business in a precise step-by-step fashion. Jones notes that there are many reasons that people buy businesses including the desire to be one’s own boss. However, he is also quick to point out that buyers should refrain from buying a business that they simply don’t like. In the quest for profits, many prospective owners may opt to do this, but it could ultimately lead to failure.
Step One – Information Gathering
For Jones, there are seven steps in the business buying process. At the top of the list is to gather information on businesses so that one has an idea of what kind of businesses are appealing.
Step Two – Your Broker
The second key step is to begin working with a business broker. This point makes tremendous sense; after all, those new to the business buying process will benefit greatly from working with a guide with so much experience. Business brokers can gain access to information that prospective business owners simply cannot.
Step Three – Confidentiality and Questions
The third step in the process is to sign a confidentiality agreement so that you can learn more about a business that you find interesting. Once you have the businesses marketing package, you’ll want to have your broker schedule an appointment with the seller. It is vitally important that you prepare a list of questions on a range of topics. There is much more to buying a business than the final price tag. By asking the right questions, you’ll be able to learn more about the business and its long-term potential.
Step Four – Evaluation
In the fourth step of the business buying process, you’ll want to evaluate all the information that you have received from the seller. Once again, a business broker can be simply invaluable, thanks to years of hands-on experience, he or she will know how to evaluate a seller’s information.
Step Five – The Decision
In the fifth step, you’ll need to decide whether or not you are making an offer. If you are making an offer, you will, of course, want it to be written and include contingencies.
If your offer is accepted, then the process of due diligence begins. During due diligence, you and your business broker will look at everything from financial statements to tax returns. You will evaluate the company’s assets. Again business brokers are experts at the due diligence process.
Buying a business is an enormous commitment. Making certain that you’ve selected the right business for you is one of the most critical decisions of your life. Having as much competent and experienced help as possible is of paramount importance.
What Should You Evaluate When Buying a Business?
Buying a business can be an exciting prospect. For many prospective business owners, owning a business is the fulfillment of a decades long dream. With all of that excitement comes considerable emotion. For this reason, it is essential to step back and carefully evaluate several key factors to help you decide whether or not you are making the best financial and life decision for you. In this article, we’ll examine five key factors you should consider before buying a business.
What is Being Sold?
If you hate the idea of owning a clothing store, then why buy one? The bottom line is that you have to have a degree of enthusiasm about what you are buying otherwise you’ll experience burnout and lose interest in the business.
How Good is the Business Plan?
Before getting too excited about owning a business, you’ll want to take a look at the business plan. You’ll want to know the current business owner’s goals and how they plan on going about achieving those goals. If they’ve not been able to formulate a coherent business plan then that could be a red flag.
You need to see how a business can be grown in the future, and that means you need a business plan. Additionally, a business plan will outline how products and services are marketed and how the business compares to other companies.
How is Overall Performance?
A key question to have answered before signing on the bottom line is “How well is a business performing overall?” Wrapped up in this question are factors such as how many hours the owner has to work, whether or not a manager is used to oversee operations, how many employees are paid overtime, whether or not employees are living up to their potential and other factors. Answering these questions will give you a better idea of what to expect if you buy the business.
What Do the Financials Look Like?
Clearly, it is essential to understand the financials of the business. You’ll want to see everything from profit and loss statements and balance sheets to income tax returns and more. In short, don’t leave any rock unturned. Importantly, if you are not provided accurate financial information don’t hesitate, run the other way!
What are the Demographics?
Understanding your prospective customers is essential to understanding your business. If the current owner doesn’t understand the business, that is a key problem. It should be clear who the customers are, why they keep coming back and how you can potentially add and retain current customers in the future. After all, at the end of the day, the customer is what your business is all about.
Don’t rush into buying a business. Instead, carefully evaluate every aspect of the business and how owning the business will impact both your life and your long-term financial prospects.
What is the Value of Your Business? It All Depends.
The initial response to the question in the title really should be: “Why do you want to know the value of your business?” This response is not intended to be flippant, but is a question that really needs to be answered.
- Does an owner need to know for estate purposes?
- Does the bank want to know for lending purposes?
- Is the owner entertaining bringing in a partner or partners?
- Is the owner thinking of selling?
- Is a divorce or partnership dispute occurring?
- Is a valuation needed for a buy-sell agreement?
There are many other reasons why knowing the value of the business may be important.
Valuing a business can be dependent on why there is a need for it, since there are almost as many different definitions of valuation as there are reasons to obtain one. For example, in a divorce or partnership breakup, each side has a vested interest in the value of the business. If the husband is the owner, he wants as low a value as possible, while his spouse wants the highest value. Likewise, if a business partner is selling half of his business to the other partner, the departing partner would want as high a value as possible.
In the case of a business loan, a lender values the business based on what he could sell the business for in order to recapture the amount of the loan. This may be just the amount of the hard assets, namely fixtures and equipment, receivables, real estate or other similar assets.
In most cases, with the possible exception of the loan value, the applicable value definition would be Fair Market Value, normally defined as: “The price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts.” This definition is used by most courts.
It is interesting that in the most common definition of value, it starts off with, “The price…” Most business owners, when using the term value, really mean price. They basically want to know, “How much can I get for it if I decide to sell?” Of course, if there are legal issues, a valuation is also likely needed. In most cases, however, what the owner is looking for is a price. Unfortunately, until the business sells, there really isn’t a price.
The International Business Brokers Association (IBBA) defines price as; “The total of all consideration passed at any time between the buyer and the seller for an ownership interest in a business enterprise and may include, but is not limited to, all remuneration for tangible and intangible assets such as furniture, equipment, supplies, inventory, working capital, non-competition agreements, employment, and/or consultation agreements, licenses, customer lists, franchise fees, assumed liabilities, stock options or stock redemptions, real estate, leases, royalties, earn-outs, and future considerations.”
In short, value is something that may have to be defended, and something on which not everyone may agree. Price is very simple – it is what something sold for. It may have been negotiated; it may be the seller’s or buyer’s perception of value and the point at which their perceptions coincided (at least enough for a closing to take place) or a court may have decided.
The moral here is for a business owner to be careful what he or she asks for. Do you need a valuation, or do you just want to know what someone thinks your business will sell for?
Business brokers can be a big help in establishing value or price.
Read More
Do You Need an Attorney to Sell a Business in Indiana?
By Troy Frank, Owner — Indiana Equity Brokers
Estimated read time: 7 min
The short answer: Indiana does not legally require an attorney to sell a business, but every seller should have one — specifically a transaction attorney with M&A experience, not a general business lawyer. An attorney reviews and negotiates the purchase agreement, protects you on representations and warranties, handles Indiana-specific requirements like the Department of Revenue tax clearance certificate, and drafts closing documents. Sellers who skip this step to save $3,000–$8,000 in legal fees regularly lose far more in poorly negotiated deal terms or post-closing liability.
Most sellers ask this question early in the process and then answer it themselves: “I’ve sold real estate without an attorney, how different can this be?”
Very different.
A business sale involves representations you make about the accuracy of your financials, the status of your contracts, the absence of hidden liabilities, and the transferability of your licenses. If any of those representations are wrong — even accidentally — a buyer can come after you for damages after the sale closes. Real estate doesn’t work that way.
The better question isn’t whether you need an attorney. It’s what kind of attorney you need — and what they should actually be doing for you at each stage of the deal.
What a Business Sale Attorney Does (Stage by Stage)
A transaction attorney isn’t just there to sign off at closing. They’re involved throughout the process. Here’s what that looks like in a typical Indiana business sale.
Before You Go to Market
Before your business is listed, an attorney can review your existing contracts for assignability issues — leases, customer agreements, vendor contracts — and flag anything that could create problems for a buyer. If your lease requires landlord consent to transfer, that needs to be known upfront, not after a buyer signs an LOI.
This is also when an attorney helps you understand your exposure. What are you prepared to represent about the business? Where are the gaps? Getting ahead of potential due diligence issues before a buyer finds them is far less painful than addressing them mid-deal.
Letter of Intent (LOI) Stage
The LOI defines the terms of the deal before the purchase agreement is drafted. It’s typically “non-binding” on the main transaction — but certain provisions are binding immediately: exclusivity, confidentiality, and sometimes a termination fee.
A transaction attorney reviews the LOI to make sure its binding provisions protect you and that the non-binding language doesn’t inadvertently create obligations you didn’t intend. An inexperienced seller who signs a poorly written LOI can find themselves locked out of the market for 90 days on a deal that was never going to close.
Purchase Agreement Negotiation
This is where most of the attorney’s work happens. The purchase agreement is the contract that governs what you’re selling, what you’re representing, what happens if something goes wrong, and what you receive in return.
Key sections your attorney negotiates:
Representations and warranties: Statements you certify as true. If any turn out to be false, the buyer can pursue a claim. Your attorney limits the scope of reps to what you can actually defend and pushes for narrower language on anything uncertain.
Indemnification caps and baskets: How much exposure you have if a rep turns out to be wrong, and how much loss the buyer must absorb before they can bring a claim. Standard deals include both a “basket” (a deductible the buyer must hit first) and a “cap” (a ceiling on your total liability). These are heavily negotiated. Buyers’ attorneys push for large caps and low baskets; sellers’ attorneys push the opposite.
Survival period: How long after closing the buyer can bring a claim against your representations. Shorter is better for sellers. The negotiated standard for most Main Street deals is 12–24 months.
Escrow or holdback: Whether a portion of the purchase price is held in escrow post-closing to cover potential claims. If your attorney can get this eliminated — or minimize the amount and duration — it puts more money in your hands at closing.
Closing
At closing, your attorney reviews all final documents, confirms that conditions have been met, handles the transfer of entity documents, and ensures the closing funds flow correctly. For sellers, this includes confirming that your promissory note (if you’re carrying seller financing) is properly executed with a personal guarantee and UCC filing.
Transaction Attorney vs. General Business Attorney: An Important Distinction
This distinction matters more than most sellers realize.
A general business attorney — the one who formed your LLC, reviewed your vendor contracts, or handled an employment dispute — may be excellent at what they do. But if they haven’t represented sellers in M&A transactions regularly, they don’t know what’s customary.
They don’t know that a 24-month survival period is standard but 36 months is a giveaway. They don’t know whether a 10% indemnification cap is market or aggressive. They don’t know how much leverage you actually have on a representation that every buyer in your industry asks for.
Not knowing what’s “market” means one of two things: they accept everything (which costs you), or they fight everything (which costs you differently, by slowing the deal or scaring the buyer off). Neither is the right approach.
Ask any attorney you’re considering specifically: how many business sale transactions have you represented sellers in during the past 24 months? What was the typical deal size? Do you regularly work with business brokers? If they can’t answer those questions clearly, you may be paying for their education.
Indiana Equity Brokers regularly works with transaction attorneys across Indiana who specialize in Main Street to lower-middle-market deals. We’re happy to provide referrals as part of our process — sellers who work with experienced transaction counsel close more smoothly and with better outcomes.
Indiana-Specific Legal Requirements in a Business Sale
Indiana has several state-level requirements that arise in business sales. A transaction attorney familiar with Indiana law knows to address these proactively; a general attorney may not know they exist.
Indiana Department of Revenue Tax Clearance
Before or at closing, the Indiana Department of Revenue requires a tax clearance certificate confirming the seller has no outstanding state tax liabilities. Without this, buyers can be held responsible for the seller’s back taxes. Most Indiana transaction attorneys handle this routinely, but it needs to be initiated early — the DOR’s processing time can add weeks to the closing timeline if it’s not requested promptly.
License and Permit Transfers
Many Indiana business licenses and permits don’t automatically transfer to a new owner. Industry-specific examples:
Alcohol permits: Businesses holding a license through the Indiana Alcohol and Tobacco Commission (IATC) must obtain IATC approval for the transfer before the buyer can legally operate. This process can take 30–60 days and must be coordinated with the closing timeline.
Professional licenses: Certain service businesses — healthcare, childcare, transportation, contracting — carry licenses tied to the individual owner or the business entity. A new owner may need to apply separately, and the existing license may not transfer at all. This is a material deal issue that needs to surface before an offer is accepted.
Environmental permits: Businesses with environmental permits (manufacturing, automotive, certain food service) may face additional disclosure requirements and permit transfer obligations under Indiana state law.
None of these are deal-killers on their own. But they all take time, and they all need to be identified before the LOI is signed — not discovered during due diligence when both sides have already invested months into the transaction.
The Broker and Attorney Are Not the Same Role
Sellers sometimes assume the business broker and the attorney play overlapping roles. They don’t.
A business broker — Indiana Equity Brokers, in our case — handles the commercial side of the deal. We value the business, market it to qualified buyers, manage the buyer screening process, negotiate price and basic deal terms, and coordinate the transaction from listing through closing. We have 23 years and 878+ closed transactions behind that process.
What we don’t do is give legal advice. We’re not qualified to, and it wouldn’t serve you well if we tried.
Your attorney handles the legal side: document review and drafting, representation and warranty negotiation, indemnification structure, closing mechanics, and the Indiana-specific compliance items described above.
The two roles work in parallel, not in sequence. The deal moves faster and closes better when both a broker and a transaction attorney are engaged from the start — not when one is waiting on the other.
We cover some of the specific legal mistakes sellers make without proper counsel in our post on legal mistakes that can derail an Indiana business sale. It’s worth reading before you engage an attorney so you know what to ask about.
What Does a Business Sale Attorney Cost in Indiana?
Attorney fees for a business sale vary based on deal complexity and the attorney’s experience level. For a typical Main Street transaction in Indiana — a deal in the $500,000 to $2 million range — sellers can expect to pay roughly:
- $3,000–$6,000 for a straightforward asset sale with standard documents
- $6,000–$12,000 for more complex deals involving real estate, multiple entities, licensing issues, or significant negotiation on reps and warranties
Some transaction attorneys charge flat fees for defined scopes; others bill hourly. Either structure works as long as the scope is clear upfront.
Context on what that number means: a skilled attorney who catches one bad indemnification provision — one that might have exposed you to a post-closing claim of $50,000 — has paid for themselves many times over. The legal fees are almost never the reason deals go sideways. Skipping them is.
Frequently Asked Questions
Do I legally need an attorney to sell my business in Indiana? Indiana law does not require an attorney to sell a business. However, virtually every transaction-experienced broker and business advisor recommends one. The purchase agreement, representations and warranties, non-compete terms, and Indiana-specific requirements like tax clearance all carry real legal and financial consequences. Sellers who proceed without transaction counsel routinely accept terms they would have negotiated differently with proper advice.
What is the difference between a business broker and a business sale attorney in Indiana? A business broker handles the commercial transaction: valuation, marketing, buyer screening, price negotiation, and deal coordination. A business sale attorney handles the legal documentation: reviewing and negotiating the purchase agreement, protecting the seller on representations and warranties, managing Indiana regulatory requirements, and handling closing documents. Both roles are necessary in most transactions, and they work in parallel — not in sequence.
What Indiana-specific legal steps are required when selling a business? Key Indiana requirements include obtaining a tax clearance certificate from the Indiana Department of Revenue, managing license and permit transfers (including IATC approval for alcohol permits), and addressing any professional or environmental licenses that may not automatically transfer to a new owner. A transaction attorney familiar with Indiana law handles these as part of the closing process, but they need to be initiated early — some take 30–60 days.
How do I find a transaction attorney for selling my business in Indiana? Ask specifically about M&A transaction experience, not just general business law. A qualified transaction attorney should be able to name specific business sale transactions they’ve represented sellers on in the past two years and describe their typical deal size. Business brokers who work regularly in the Indiana market — including Indiana Equity Brokers — can refer you to attorneys who specialize in Main Street transactions at appropriate fee levels.
What does a business sale attorney cost in Indiana? For a typical Main Street business sale in Indiana (deals in the $500,000–$2 million range), seller-side attorney fees generally run $3,000–$12,000 depending on deal complexity. Straightforward asset sales with standard documents fall toward the lower end. More complex transactions involving real estate, licensing issues, or significant purchase agreement negotiation fall toward the higher end. Most transaction attorneys offer flat-fee or capped-fee structures for defined scopes of work.
The Bottom Line
You need an attorney. Specifically, you need one who has done this before — in M&A, at a deal size similar to yours, in Indiana.
The broker handles the deal. The attorney protects you in the deal. Those are different things, and you need both.
If you’re preparing to sell a business in Indiana and want to understand the full process — including what your legal and advisory team should look like — a confidential conversation with Troy Frank takes about 20 minutes and costs nothing. Indiana Equity Brokers has closed more than 878 Indiana transactions and has referrals to transaction attorneys across the state.
Read More
Why should I go to a business broker?
A professional business broker can be helpful in many ways. They can provide you with a selection of different and, in many cases, unique businesses, including many that you would not be able to find on your own. Approximately 90 percent of those who buy businesses end up with something completely different from the business that they first inquired about. Business brokers can offer you a wide variety of businesses to look at and consider.
Business brokers are also an excellent source of information about small business and the business buying process. They are familiar with the market and can advise you about trends, pricing and what is happening locally. Your business broker will handle all of the details of the business sale and will do everything possible to guide you in the right direction, including, if necessary, consulting other professionals who may be able to assist you.
Your local professional business broker is the best person to talk to about your business needs and requirements.
Read More