Buying a Business

Memorandum of Understanding

We solidify your commitment to purchase a Pittsburgh, PA-area business using the brokerage services of Sterner Consulting with a Memorandum of Understanding.

A memorandum of understanding (MoU) is a document describing a bilateral or multilateral agreement between two or more parties. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used in cases where parties either do not imply a legal commitment or in situations where the parties cannot create a legally enforceable agreement. It is a more formal alternative to a gentlemen’s agreement.

Whether or not a document constitutes a binding contract depends only on the presence or absence of well-defined legal elements in the text proper of the document (the so-called “four corners”). The required elements are: offer, consideration, intention (consensus ad idem), and acceptance. The MoU basically states that you agree to work with Sterner Consulting exclusively for a specified amount of time to help you broker a business acquisition. We agree to work hard on your behalf to help you find the right business at a price, and with terms consistent with what you can afford, and consistent with your needs and abilities as a business owner.

Non-Disclosure Agreement(s)

You will be required to sign a Non-Disclosure agreement promising not to disclose any confidential business information we provide to you on the businesses for sale that we discuss in detail. Likewise, Sterner Consulting will be happy to sign a NDA agreeing to keep all of your personal financial information confidential, except for when it is necessary to provide your financial information to a seller or their agents.

Personal Financial Statement

You will be asked to provide us with information about yourself, such as a business resume, and a personal financial statement. The more we know about you, the more likely we can find a business that is for sale and meets your needs. The more information we have to provide to the seller, the better we will be able to improve the deal terms on your behalf.

Review of opportunities

Together we will discuss and review various types of businesses so that we can inspect in more detail the businesses that appeal to you most.

Introductions

We introduce you to the owners of the businesses you are interested in most, and discuss the important deal factors associated with each opportunity.

Meetings with Sellers

When the timing is right, a meeting with you, the business seller (and their associates) and Sterner Consulting will be arranged. This meeting will give you the chance to ask the owner questions about how the business operates, and for you to describe your qualifications to the seller.

Preparing a Formal Offer

We will assist you in preparing an offer or letter of intent to purchase the business you like. You may be required to put up earnest money to demonstrate your intent to the seller. Most offers are contingent upon your inspection of the books and records of the business, so that you can verify that it has been described to you accurately. The offer is not binding until you are satisfied and remove all contingencies.

Presentation of the Offer

We present your offer to the seller. We give to the seller your background, financial information, experience and point of view in arriving at the offering price, including all terms and conditions. Favorable background information about you will result in favorable consideration of your offer. We carefully explain the terms and conditions of the offer to the seller and/or other decision makers.

Counter Offer(s)

Generally the Seller will make a counter offer. The seller may accept your offer to purchase the business as it is presented, but that would be a rare circumstance as there are generally one or more change requests. This initiates a period of back-and-forth negotiations until all issues are resolved.

Reaching an Agreement

When buyer and seller agree to all terms and conditions of the sale, the offer terms are formalized into a Purchase and Sale Agreement, contigent on your successful inspection of the business and its books. Once you are completely satisfied with the terms and inspection, the agreement is signed and presented to the owner.

Business & Inventory Inspection

You meet with the seller of your chosen the business to examine its financial records. Any questions you have will be resolved at this time.

Contingency Removal

If you are satisfied with your inspection of the business, you remove all contingencies in the agreement. It now becomes a binding agreement. At this
point you are only a few steps away from owning the business.

Lease Agreements (if Applicable)

If the business is located in leased building space, we work with the landlord or building owner to get an assignment of the current lease or to get a new lease for you.

Escrow/Closing Attorney

We provide all documents to the transferring agent or attorneys so they can prepare the closing documents. They conduct lien searches through the Pennsylvania record systems, and also make arrangements to assign any notes or equipment leases.

Business Inventory

Arrangements are made for you and the seller to count and price any inventory (if applicable).

Transfer of Ownership / Closing

All parties meet to sign documents and hand over the keys to the business.