ues involving the transfer. You need to give your accountant and lawyer a draft of the letter for review. This way, you are protected from any loopholes that can harm you. It proves that you are a serious buyer and entices the seller to more openly discuss sensitive aspects of the business. The letter is a written contract that can be legally cancelled at any time without the consent of the other party, so be sure that you and the seller are in agreement.Once everything is settled and you and the seller are in agreement to the term of the letter of intent, the next task you face is finding the initial capital. Using other people's money to finance a purchase is a key ingredient if business success. Financing falls into two separate categories: debt and equity.Debt financing is the most elementary of the two. It is basically taking a loan from a lender and paying it back with interest. It is reliant on the business or individual's ability to pay the loan off. Usually, collateral will be made available to the source of the loan in the case that you cannot continue to make payments. A good credit history and reputation is another aspect that financing is reliant upon. With these, a loan is much easier to get."Equity financing means obtaining funds in exchange for selling or giving up a part of interest in the business. Equity financing is not a loan; rather, it is the sale of a part of you business."(Fallek, 82) The popularity of equity financing has increased in the high tech industries in the past few years. However, selling a part of your newly purchased business may not be your cup of tea, so choose your type of financing wisely.Some traditional sources of capital include yourself, family and friends, commercial banks, loan companies, insurance companies, credit unions and private investors. The old saying, "don't mix business with pleasure" is applicable when dealing with family and friends. Taking a loan from these sou...
