Frequently Asked Questions

Serving Southern California Since 1987

How long has been in business?

The firm started doing business in 1987, but the broker for the firm, Michael Chulak, has been licensed to sell businesses since 1971.


Is it possible for me to earn commissions by simply referring potential buyers and sellers to a full time, experienced business broker or agent?

You can become a referral agent, and earn thousands of dollars consistently each year by limiting your activating to making referrals.


Are business brokerage commissions set by law in California? It seems that every firm is charging 10% to sell a business.

Commissions are not set by law. Every business brokerage firm establishes what it will charge to market and sell a given business. Commissions and levels of service vary from firm to firm. Pacific Business Advisors generally charger from 8% to 10% depending upon several factors including the size of the business.


Does your firm ever joint venture the purchase of a business with others?

Yes. We will consider the joint venture acquisition of certain types of businesses. Call Michael Chulak to discuss a potential joint acquisition of any business.


Can a non-citizen own a business in the United States?

Absolutely. Whether you are a citizen or a non-citizen, we would be pleased to help you purchase a business anywhere in California.


Is 100% cash required to purchase most businesses?

No. The Small Business Administration will lend up to 80% to qualified purchasers and some sellers choose to offer financing because they understand that providing financing makes their business far more saleable.


Should I consult with a CPA before buying an existing business

Yes. How a purchase is structured can have both short-term and long-term effects on your tax liability. In addition, a CPA can assist in the business acquisition due diligence process by reviewing the tax returns and financial statements of the business being considered for purchase. If you do not have CPA and need a referral, please call us.


When buying an existing business, can I expect the seller to provide any training?

This is an important term to be negotiated between the buyer and seller where we can be of great assistance. A degree of training is expected, but must be carefully described in detail in the purchase agreement. This provision can make or break a new business if the buyer does not already have extensive experience with the type of business being acquired. 


If we engage your firm to sell our business, how will you advertise it? 

There are several websites that are multiple listing services for business brokers. We will select those that we believe would be the most effective for your business. Also, most importantly, while maintaining struct confidentiality, we will send an Offering Memorandum to an extensive list of cooperating business brokers and agents, and to the people who have expressed a desire to acquire a business like yours through our website and through other sources. 


When marketing a local business, do you target potential foreign buyers?

Absolutely. In California foreign buyers and immigrants make up a large percentage of the buyers of small and medium sized businesses. While these buyers come from all nations, in our experience, most are Chinese, Korean, Japanese, Mexican, Persian, and Indian (Republic of India). We also target private equity groups, and many others.


Does your firm provide business appraisals?

No. While we will estimate the value of any business where we are representing a buyer or seller, our valuation is not the same as a full appraisal prepared by a licensed appraiser that specializes in business appraisals. Only a third party appraiser can be totally objective because he or she will not earn a commission upon the sale of the business.


Is the primary factor in valuating a business the net income before taxes?

Yes, but there are other important factors to be considered such as:

  • Is the net income trend increasing or decreasing, and if so, why?
  • Is the industry growing or shrinking?
  • Is the business location improving or deteriorating?
  • Is the income of the business diversified, or is it generated by only a few sources?

Pacific Business Advisors

Serving All of California Since 1987