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Thread: Thinking of buying a business

  1. #11
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    Quote Originally Posted by HumaneHosting View Post
    So what your suggesting that you spill even more money down the drain??
    I think you might be forgetting we're going on the assumption that the business itself has great potential from a cursory overview and what the seller has provided in the offering and initial due diligence.

    Quote Originally Posted by HumaneHosting View Post
    I don't know about you but I rather let's a honest seller tell me upfront the details rather than me PAYING for someone to get that for me.
    Unfortunately, finding that truly honest seller who doesn't embellish the numbers is getting harder to find. They don't even need to embellish that much as many business sellers think that their business is worth more than it actually is. If you don't believe me, start actively searching for business for sale. After a few hours you may only have a couple of candidates and many of them may require a hard offer before you can begin due diligence.
    Brad Miedema
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    Quote Originally Posted by HumaneHosting View Post
    So what your suggesting that you spill even more money down the drain??

    I don't know about you but I rather let's a honest seller tell me upfront the details rather than me PAYING for someone to get that for me.
    Hate to break it to you it doesn't work that way. Lawyers not only instill fear in the seller, but they'll find things you won't find. They went to school for 10 years. You didn't.

  3. #13

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    Quote Originally Posted by Fulcrum View Post
    I think you might be forgetting we're going on the assumption that the business itself has great potential from a cursory overview and what the seller has provided in the offering andinitial due diligence.



    Unfortunately, finding that truly honest seller who doesn't embellish the numbers is getting harder to find. They don't even need to embellish that much as many business sellers think that their business is worth more than it actually is. If you don't believe me, start actively searching for business for sale. After a few hours you may only have a couple of candidates and many of them may require a hard offer before you can begin due diligence.
    I am sorry but a quality sales person make you a satisfied customer and keep you that way. In order for that to happen he/she needs to be involved with his/her due diligence from start to finish and even after you sign the papers.

    If you don't believe that just try to remember anything you brought with the best experiences and chances are you will not really remember what and how much you brought something for (or at least initially) but rather the person who sold it to you. Why? Because he/she was ensuring you will only come back for more.

    I remembered when I read about someone explaining that they would only buy their hard drives from a specific person and why? Because she took care of packing them so much that the MTBF (Mean Time Between Failures) were so different apart that the business buying those drives went through the "hoops" to find out where she left to when they discovered that their drives weren't packed the same.
    Last edited by HumaneHosting; 01-22-2018 at 11:08 PM.

  4. #14

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    Quote Originally Posted by Owen View Post
    Hate to break it to you it doesn't work that way. Lawyers not only instill fear in the seller, but they'll find things you won't find. They went to school for 10 years. You didn't.
    I never said that, I was simply stating that so to be able to pay less for the lawyer to come in and do the validations.

    However why on earth would I pay even more to have them dig under the rugs if I already noticed some "fishy" things about a purchase? Wouldn't it be better to move on and go elsewhere?

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    Quote Originally Posted by HumaneHosting View Post
    So what your suggesting that you spill even more money down the drain??

    I don't know about you but I rather let's a honest seller tell me upfront the details rather than me PAYING for someone to get that for me.
    What you are suggesting is trusting what a seller says and risk your entire investment to save a few dollars for a lawyer? Legal expense is just a ordinary expense of doing business. You know the saying, those who represent themselves have a fool for a lawyer. Are you familiar with buying a business?

    Do you know all the things that need to be verified and negotiated? Do you know how to audit inventory against inventory invoices? Why? to see if there is more inventory than has been paid for. Do you want to unexpectedly be presented with an invoice the seller forgot. Do you know how to check govt data bases for liens? Pending litigation? Can you decipher a complex lease, with obscure expenses and potential liabilities, price increases, renewal options, repair and maintenance obligations etc. Can you audit and match bank statements and tax returns to claimed revenue? Do you know the various forms of sale? Are you buying the entire corporate structure or just an asset sale? Would you accept the sellers contract without having it reviewed?

    You wouldn't do all that just to save a few dollars, but rather trust the broker or seller? Brokers couldn't care less. They may even discourage you from too much due diligence. They just want the commission. Sellers may not be dishonest, but just sloppy and unorganized.

    Trying to save a few dollars upfront on a potentially life changing business purchase is foolish. Unless of course, you are already intimately familiar with the business.

    I've been involved with business purchases and financing where even illegal activity was discovered. One case the revenue was out of line with the net profit. Even the owner didn't realize the bookkeeper was embezzling a fortune!

    Unless its a basic and very transparent business you need professional help. If you can't afford a lawyer and/or can't chew through the initial due diligence then you probably shouldn't be buying a business.
    Last edited by Paul; 01-23-2018 at 12:01 AM.

  6. #16

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    Quote Originally Posted by Paul View Post
    What you are suggesting is trusting what a seller says and risk your entire investment to save a few dollars for a lawyer? Legal expense is just a ordinary expense of doing business. You know the saying, those who represent themselves have a fool for a lawyer. Are you familiar with buying a business?

    Do you know all the things that need to be verified and negotiated? Do you know how to audit inventory against inventory invoices? Why? to see if there is more inventory than has been paid for. Do you want to unexpectedly be presented with an invoice the seller forgot. Do you know how to check govt data bases for liens? Pending litigation? Can you decipher a complex lease, with obscure expenses and potential liabilities, price increases, renewal options, repair and maintenance obligations etc. Can you audit and match bank statements and tax returns to claimed revenue? Do you know the various forms of sale? Are you buying the entire corporate structure or just an asset sale? Would you accept the sellers contract without having it reviewed?

    You wouldn't do all that just to save a few dollars, but rather trust the broker or seller? Brokers couldn't care less. They may even discourage you from too much due diligence. They just want the commission. Sellers may not be dishonest, but just sloppy and unorganized.

    Trying to save a few dollars upfront on a potentially life changing business purchase is foolish. Unless of course, you are already intimately familiar with the business.

    I've been involved with business purchases and financing where even illegal activity was discovered. One case the revenue was out of line with the net profit. Even the owner didn't realize the bookkeeper was embezzling a fortune!

    Unless its a basic and very transparent business you need professional help. If you can't afford a lawyer and/or can't chew through the initial due diligence then you probably shouldn't be buying a business.
    I am not saying that, what I am saying that you as the buyer do your part to be "buyer be aware". Because what's the point of hiring a lawyer to check everything for you only to find very basic findings that you could of done yourself? When you could at least check some of these yourself and if you still think it a good buy have them validate these and the rest?

    It's like the different of having a plumber unclog some sinks when you didn't even tried unclogging it yourself in the first place... You may need the plumber to unclog a few of them but even if you did some work you could possibly save on that work order.
    Last edited by HumaneHosting; 01-23-2018 at 12:15 AM.

  7. #17
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    Quote Originally Posted by HumaneHosting View Post
    I am not saying that, what I am saying that you as the buyer do your part to be "buyer be aware". Because what's the point of hiring a lawyer to check everything for you only to find very basic findings that you could of done yourself? When you could at least check some of these yourself and if you still think it a good buy have them validate these and the rest?

    It's like the different of having a plumber unclog some sinks when you didn't even tried unclogging it yourself in the first place... You may need the plumber to unclog a few of them but even if you did some work you could possibly save on that work order.
    I agree, do what you can yourself. But the point of an attorney/accountant is for the things you can't do. Like buying a house, you can check it out and like it, but you can't check the foundation, plumbing, electric, title search and so on yourself. The cost of an attorney is relative to the cost to purchase. I wouldn't pay 5 K to check out a 10k business. But I'd spend more than that to check out a 300 k+ business.

    At this point we still don't know anything about the proposed purchase the poster was talking about.

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    Quote Originally Posted by HumaneHosting View Post
    I am sorry but a quality sales person make you a satisfied customer and keep you that way. In order for that to happen he/she needs to be involved with his/her due diligence from start to finish and even after you sign the papers.

    If you don't believe that just try to remember anything you brought with the best experiences and chances are you will not really remember what and how much you brought something for (or at least initially) but rather the person who sold it to you. Why? Because he/she was ensuring you will only come back for more.

    I remembered when I read about someone explaining that they would only buy their hard drives from a specific person and why? Because she took care of packing them so much that the MTBF (Mean Time Between Failures) were so different apart that the business buying those drives went through the "hoops" to find out where she left to when they discovered that their drives weren't packed the same.
    A business is different from a hard drive from Walmart. Business mergers and acquisitions can be incredibly complex.

  9. #19
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    Quote Originally Posted by HumaneHosting View Post
    I never said that, I was simply stating that so to be able to pay less for the lawyer to come in and do the validations.

    However why on earth would I pay even more to have them dig under the rugs if I already noticed some "fishy" things about a purchase? Wouldn't it be better to move on and go elsewhere?
    A lot of the time that specific business can have an asset you want (patents, trademarks, etc.) and you can't get those elsewhere.

  10. #20

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    Quote Originally Posted by Owen View Post
    A business is different from a hard drive from Walmart. Business mergers and acquisitions can be incredibly complex.
    Excuse me? But that regular shipment of drives was a B2B sales not "just buying a single HDD from Walmart". If my memory serve me currently it was a dedicated server provider who have racks from a data center or something to that effect that rent out entire units to prospect clients.

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