Buyer FAQs
We are here to help you find the perfect business in your situation. We are trying to answer the most frequently asked questions (FAQ) about buying a business.
Q: What are the advantages of buying an established business?
• Lower risk of failure.
• Higher risk of start-up businesses failure within first 3 years.
• Most of established businesses with a first 3 years track record of profitability are still in business successfully after 5 years.
• Proven business model over the years and established reputation.
• Customers, employees, suppliers and operational business system are all in place.
• It saves money as it usually costs more to start-up and build a business from scratch than to buy an established business.
• It saves time as it’s hard to start making money from day one vs. 2 years to profitability for a typical start up.
• Financing may be readily available from seller as it’s hard to get from a bank.
Q: Why work with a Business Broker?
- It saves you time to find business that meets your needs as we are in constant contact with Business owners who need to sell their businesses.
- It’s of less hassle to you as broker will help you find business quickly, prepare offer and finally help close the deal.
- A broker’s time and expertise are FREE to you as business broker fees are paid by sellers.
- You get customized service as business broker is specialized in buying and selling business
Q: What type of listings do you have?
We have all types of small business listings, MLS or Exclusive with confidential information and that can be provided to only qualified buyer. We will find perfect business for you even if we don’t have one in our inventory. We look after the interest of buyer client.
Q: Will you represent me as a buyer agent for business listings with other broker?
Absolutely. We’ll be more than happy to represent you for the business listings with other brokers.
Q: How do I search business opportunities with you?
You can search through the business listings with us by clicking the following link:
Q: How can I find out about the newest business opportunities in Greater Toronto Area?
Your privacy is guaranteed and we take it very seriously. You can fill out the following form to know about the new business opportunities:
Business Buyer Information Form
We will never broker, rent, or share your e-mail address to anyone. You will also be able to unsubscribe at any time.
Q: Why do I need to sign Non-Disclosure Agreement to receive confidential business information?
We are in agreement with the seller to keep sensitive business information confidential and disclosure of such information to third party may harm or result in potential damage to the existing business of the seller. Such sensitive business information can only be disclosed to the qualified and serious buyer under agreement. Hence we cannot and will not waive the requirement of Non-Disclosure agreement before release of such information.
Q: Why are sellers hesitant in providing information necessary for my due diligence?
All necessary business information necessary to make an offer to purchase is the right of the buyer. If the buyer requests for information that is highly confidential/ sensitive e.g. client lists, bank statements, 3 years financials etc. that are very time consuming to gather are deferred until after the buyer has made an offer, an agreement on price and terms and conditions have been reached. Otherwise, the seller could spend countless hours gathering data for and revealing confidential trade secrets to dozens of buyers who have no intention of paying anywhere near what the seller is willing to accept. That would be a waste of the buyer’s and seller’s time and damaging to the business.
If you want to see highly confidential or information you must first submit your best offer contingent upon seller being able to prove his advertised earnings and other claims.
Q: What could be the most common sources of funds for buying a business in Ontario?
In approximate order of usage:
- Cash, bank accounts, stock, bonds and other highly liquid investments.
- Home equity.
- Seller financing.
- Business/ asset sales.
- Friends and families.
- RRSPs and other retirement accounts (we can show you how to tap this source.
- Bank loans.
- Investment groups/ funds
Q: What are the requirements for bank financing in business purchase?
Most business acquisitions do not involve bank financing. It is typically not a very simple matter to receive a business loan unlike home purchases where the loan is backed by real property. Typically business loans are far riskier for lenders. Few of the business acquisitions involve bank financing.
If a business acquisition is to qualify for bank financing, the following conditions must be met:
- The buyer must have good credit preferably 700+ beacon score.
- Strong experience in the business category he is seeking to acquire e.g. prior ownership or senior management positions.
- Debt service must be no more than 30% of the projected discretionary earnings and requires a minimum 20% down payment from the buyer.
- Three years of business tax returns showing profits each year are required.
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