How to Buy
Gateway School Sales has identified 9 steps in the buying process. Those steps are:
1. Meet with a Gateway School Sales Business Broker. When you meet with a member of our staff, they will discuss the process of purchasing a childcare business or school, including funding sources, transaction types, and answer any questions you have about this process. They will also need to discuss the location where you would like to purchase a school, the profitability, and the amount of money you are willing to invest as a down payment.
2. Review Business Information. Once you have found a childcare business or school that you are interested in buying, a broker will review the information in the Confidential Business Review with you. This Confidential Business Review will include business activity, financial information, employee and staff information, equipment list, photos, and the seller’s motivation. You will likely still have questions after reviewing this information, questions that only the seller can answer. The next step is a meeting between yourself and the school’s owner; the broker will coordinate this meeting.
3. Meet with the Seller. The buyer/seller meeting is where you, as the prospective buyer, meet with the seller and learn more about the school. The seller will also want to know more about you. This is the time to ask all of the questions you have. After the buyer/seller meeting, you will need to decide whether to make an offer on the childcare business or school or continue your search.
4. Make an Offer. There are two ways to submit an offer on a school. The first option, an Offer to Purchase with conditions and contingencies, is a standardized form that is legally binding after any conditions or contingencies to the offer have been removed. After completing due diligence, you will remove the contingencies and decide to move forward, renegotiate, or terminate the Offer to Purchase. If you cannot remove the contingencies to the offer, 100% of your earnest money is returned to you. The second option, a Letter of Intent (LOI), is a non-binding document typically in letter format. Both methods work for offering to purchase a business or school as both will be replaced with a Definitive Purchase Agreement after the due diligence is completed.
5. Negotiate the Offer. Negotiation is a common part of any transaction. You will want to negotiate with the seller, and the broker will help find common ground between all parties to ensure the transaction is completed. If you are not flexible with your demands, you will have issues purchasing any business or school. Working through the broker and keeping negotiations at arms’ length protects your relationship with the seller for post-closing training and transition.
6. Perform Due Diligence. Due diligence is the investigation phase of a transaction. You will want your advisors to review the financial, market, and business information to ensure that the childcare business or school will provide a foundation for your future success.
7. Draft the Definitive Purchase Agreement. Once the due diligence is finished, it is time to draft the Definitive Purchase Agreement (DPA). The DPA documents all the details of the sale. Supporting documents include non-compete agreements, Bill of Sale, representations, promissory notes, and more. All of these documents will need to be reviewed by both your team of advisors and the seller’s team.
8. Close the Deal. Once all parties are satisfied with the DPA, any remaining documents – leases, assumed name certificates, etc. – that need to be signed are signed and funds are transferred. The childcare business or school is now legally yours.
9. Begin Transition and Training. The now former owner will spend anywhere from a couple days to a few months training you as the new owner to ensure that the transition goes as smoothly as possible. If the DPA states any other conditions of transition, this is the time those conditions will be met.
These 9 steps will lead to successful transitions of ownership. Let Gateway School Sales start you on the path to ownership today.