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Bleeding Red · 10-04-2018, 01:03 PM

Wife & I though about buying a business a few years ago. Babes in the woods with no business experience or education, we got schooled - luckily before we spent too much money.

A few things we learned:
- Look into talking with (or hiring) a Certified Business Valuatior (CBV). He/she can give you a good idea of what the business is worth.
- Determine exactly what you are buying - the whole business (employees, debt, intellectual property, any outstanding contracts or leases, customer lists) OR just the name.

- Get everything in writing! Not just the transaction (I agree to buy the business for $X - If the seller says that the employees won't be sticking around have him detail - in writing - what is happening to them - John is retiring in 6 months (and you are on the hook for a pension or payout of $X), Jane will be let go (and you are on the hook for the severance). Who pays those employees to go away affects the purchase price.
- If nothing in in writing yet. watch out for surprises - seller changes the price or failed to mention an obligation earlier. (One odd thing I can think about is maybe they want the official office at the old address till the end of the fiscal year to reap the tax benefits.)

- Make sure the seller knows what they are selling.
- Try to talk to a few people in the industry/business (friends or relatives) to find out what they think about the business overall, how long they think it will last, what the wave (good times vs. bad times) is like, if it is crowded, how they envision the next 5-10 years.

In my case we got a valuation and the price was right, but at the last minute the seller wanted to keep a cash asset (government grant money) after the transaction (ummm, NO!), then assured us his employee was retiring, but wanted us to agree to a severence payment (ummm, NO!). At one point, in a meeting with the sellers accountant the seller proclaimed "but that's not good for me!" at which the account replied "please excuse us while I explain to the seller what it is he is selling."

Unfortunately, what we thought would be a good opportunity and something that could be fulfilling and life changing, fell completely through.

Hope all works out for you.

10-04-2018, 01:03 PM	#4
Bleeding Red Powerplay Quarterback Join Date: Oct 2001 Exp:	Wife & I though about buying a business a few years ago. Babes in the woods with no business experience or education, we got schooled - luckily before we spent too much money. A few things we learned: - Look into talking with (or hiring) a Certified Business Valuatior (CBV). He/she can give you a good idea of what the business is worth. - Determine exactly what you are buying - the whole business (employees, debt, intellectual property, any outstanding contracts or leases, customer lists) OR just the name. - Get everything in writing! Not just the transaction (I agree to buy the business for $X - If the seller says that the employees won't be sticking around have him detail - in writing - what is happening to them - John is retiring in 6 months (and you are on the hook for a pension or payout of $X), Jane will be let go (and you are on the hook for the severance). Who pays those employees to go away affects the purchase price. - If nothing in in writing yet. watch out for surprises - seller changes the price or failed to mention an obligation earlier. (One odd thing I can think about is maybe they want the official office at the old address till the end of the fiscal year to reap the tax benefits.) - Make sure the seller knows what they are selling. - Try to talk to a few people in the industry/business (friends or relatives) to find out what they think about the business overall, how long they think it will last, what the wave (good times vs. bad times) is like, if it is crowded, how they envision the next 5-10 years. In my case we got a valuation and the price was right, but at the last minute the seller wanted to keep a cash asset (government grant money) after the transaction (ummm, NO!), then assured us his employee was retiring, but wanted us to agree to a severence payment (ummm, NO!). At one point, in a meeting with the sellers accountant the seller proclaimed "but that's not good for me!" at which the account replied "please excuse us while I explain to the seller what it is he is selling." Unfortunately, what we thought would be a good opportunity and something that could be fulfilling and life changing, fell completely through. Hope all works out for you. Last edited by Bleeding Red; 10-04-2018 at 01:13 PM.