How it Works: Buying
RedTire is a matchmaker helping “Aspiring Owners” (Buyers), who are either highly qualified graduates who have the expertise and ambition to run the target business or who are experienced business managers who have a desire to be their own boss by purchasing and running their own business, and completely vetted candidate businesses where the owner is looking to retire (“Sellers”). Although each transaction is modified to ensure a successful ownership transition, the general steps in the RedTire buying process are as follows:
Step 1: Making contact
Candidate / potential replacement owners or management are identified via application on this website OR by posting back prepaid postcards which are direct mailed to them OR by recommendation from friends and associates of RedTire (past satisfied buyers and sellers, partner universities, accountants, local bankers, attorneys and economic development officials).
Step 2: Establishing candidate needs
Within two weeks of your initial inquiry, a member of our team will reach out to you to discuss your needs including; preferred business type, target locations, your needs and your ideal timeline for becoming your own boss. They will also discuss the RedTire program in more detail and help you understand the process involved in transitioning an existing well-run successful business from a retiring owner (“Seller”) to you - a younger suitably qualified candidate replacement owner (“Buyer”).
Step 3: Enrolling in the Program
Potential candidate buyers MUST enroll in our program via the online application located on this website. There are two application options for either a student or non-student candidate. Non-student enrollment requires agreeing to the authorization and release terms of program. Student applicants must also agree to these terms but they are also required to complete self-evaluation summary questionnaire upon applying. We use these preliminary surveys to ensure a good match., i.e. fit between each candidate company (“Seller”) and the candidate replacement management (“Buyer”). All information provided by either the student or non-student applicant will be held in the strictest confidence.
Step 4: Reviewing your application and establishing “fit”
Within ten working days of receiving your application, a member of our team will review your application and contact you. We will also ask you to submit a copy of your resume in order to validate your qualifications. Where needed, in professional practice situations, you will also be required to provide copies of your state or local licenses to practice in order to ensure local mandated regulations are adhered too.
Step 5: Discussing matching opportunities
Suitable target or matched opportunities will be presented or discussed with you and should one of our current listings match your criteria, we will contact the business to establish if there is a “fit”. Be advised that, at this time, your resume, and where applicable your license / credentialing information, will be given to the business owners that you’re interested in purchasing to allow those owners to evaluate your candidacy.
Step 6: Future Outreach and Database
If none of our current listings match your specific criteria, your information will be retained for possible future matches. We will add your name to our growing database of candidates and contact you should any future business opportunities meet with your needs. Should you decide you are no longer interested in being enrolled in our program you can simply request that your candidacy information be destroyed, which will be confirmed via an email notification.
Step 7: Discussing specifics of the matched opportunity
In the event that one of our current listings does match your criteria and the current ownership believes you should be considered as a prospective successor we will get a Non-Disclosure Agreement (NDA) signed and executed by all parties to ensure confidentiality and discreetness during the negotiation of the transaction. Your details, resume and licensing information will be discussed with the seller so that they agree to proceed with getting the NDA in place. With a fully executed NDA in place, our team will then be able to share more specific, personal information regarding the listing including; exact location, owner name, business name, etc.
Step 8: Financial Review
An in-depth thorough financial review will be undertaken with you about the target business covering the past five years reported results of the business. Directly after completing the NDA, we will send you a copy of the recently prepared Valuation that RedTire would have conducted on the business. This is a benchmark of approximate value, a snapshot in time! It estimates the value of the business as an ongoing concern and is represented as an independent range to help with negotiating and determining the eventual purchase price. The application of financial formulas is generally straightforward and applied as taught in the KU School of Business. Furthermore, the techniques and formulas which are used in arriving at values are those which are generally accepted by business buyers and their professional advisors.
RedTire provides the “Opinion of Value” of the business as a “TOOL” to help with the mediation and negotiation between the retiring business owner and you’re the replacement aspiring business owner. The valuation and attendant deal terms are intended to help both parties proceed to a successful buy/sell negotiation, and does not represent an obligation on any parties behalf.
Step 9: Visual Inspection
Should you, after completing the financial review, want to proceed further with the opportunity presented, a ‘Site Visit’ and initial meet-and-greet will be arranged to introduce you to the retiring owner (Seller). Wherever possible (logistics permitting) a RedTire representative will accompany you on that first meeting. The main purpose of this meeting is to establish a visual inspection of the facility, equipment and review the business aspects of the opportunity. This meeting will allow both the aspiring owner (buyer) and retiring owner (seller) assess if this will be a good fit for a transition and thus lead to an offer and acquisition / sale.
Step 10: Offer and Deal Terms
With the financial review and visual inspection completed by this stage, you will be in a position to make an offer in the form of a “Letter of Intent” (LOI) or Term Sheet which will be presented by RedTire to the owner. Assistance to refine and help prepare the offer will be provided by our team. We will also mediate the negotiation of basic terms and contingencies between both parties. By executing the LOI, the buyer will then be able to begin the Banking and Transactional Phase and will have an agreed amount of “Exclusive” time/days to complete their own due diligence of the business.
Step 11: Banking and Transactional Phase
The final step is the Transactional phase where the RedTire team will be available to help both the business owners, aspiring and retiring, achieve a successful purchase and transition, including providing business counsel, offer banking and financial advice and may even post acquisition help the replacement management grow the business. At this phase of the process, both parties will be encouraged to appoint their own professional people (lawyers and accountants) to assist in getting the deal “closed”. From getting a commitment letter from the bank, that the buyer decides to use, to providing another set of eyes and ears in reviewing the attendant legal documents, the RedTire team will be available throughout this phase until closing even though you may have your own team to get you to the finish line.