- April 17, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Frustrating Experience with Business Purchase
I recently had the most challenging experience while attempting to purchase a business. This was my first time going through this process, and despite having a team of advisors assisting me, the broker made it exceptionally difficult.
### Communication and Misleading Tactics
To begin with, the broker continuously used the tactic of highlighting the business’s potential without any actual evidence of profitability. This misleading approach only added to the confusion and frustration of the situation. Moreover, the fact that the broker is related to the vendor and admitted to doing it as a favor raised concerns about bias and lack of transparency.
### Delays and Lack of Information
Throughout the process, the broker consistently delayed providing me with essential information, causing unnecessary delays and complicating the decision-making process. During the viewing, he even lacked access to crucial areas of the property, further hindering my ability to assess the business accurately.
### Lack of Integrity
The broker’s credibility came into question when I discovered that he had lied twice about receiving written offers at inflated prices, which only added to the sense of distrust and frustration. Additionally, his lack of communication on the day of the offer deadline, only sending a multiple offer form hours after I submitted my offer, further highlighted his unprofessionalism.
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****** just grabbed a
It is a power play.
Unfortunately being incompetent can often be effective against motivated buyers who fear losing out.
You might consider a response that doesn’t appeal to your preference for low risk cut and dried opportunities- like threatening to walk away
I can only share reckons not good advice based on what you have said.
But the idea of dealing with an agent to get the best outcome is to manage your emotions and just focus energy on getting what you want on the terms/price/risk that you want. If that means not risking another better deal you’ll pay more to cover it off.
You obviously think the business has some value which is why your making the offer. Your going to have to measure the value youo think it has vs what your willing to offer.
If your already close to break even over payback period you should just hold out and let him come back.
If you miss out how likely are there to be other opportunities?
>At the viewing he didn’t have half of the keys to open up parts of the building.
I’ve caught him out lying twice about having written offers submitted at vastly inflated, and downright bizarre prices.
I admittedly know nothing about buying a business, but at this point I’d be seriously worried about what else he might be lying about, and/or not disclosing.
The value of the business is it’s assets/IP and it’s fixed contracts for work.
Assets can be purchased from many sources.
Does the business have contracts for business? Do they have locked in, regular orders/ requirememts from customers, that they must go to you for?
Does the business have IP or other tangibles, that mean customers must or should come to you?
If not, it’s a “key man” business and has limited goodwill value.
If this is the case, just start your own business, put a business plan together and get your finance sorted.
Walk away.
Is he licenced agent? If he is, and you’ve caught him out twice with lies, I’d be looking at reporting these facts to the licencing body if you have any evidence.
Yes they’re working for the vendor, but they’re not allowed to lie.
I have found the majority of business brokers to just be very incompetent, more so than real estate agents. I have sold a business, and helped to sell a couple business for family members and every time found brokers to make the whole process more difficult and get lower offers than just doing it independently.
Also a lot of small, and even larger business owners actual keep pretty bad records, and some even keep no formal records at all which makes it hard to actually get the information into potential buyers’ hands.
Can you add a deadline on your offer still? This can help twist the power dynamic back in your favour. As you say above, be prepared to walk. Plenty of non bullshitters out there, in my experience its never worth dealing with clowns.
This is no different than when buying a house. The agents job is to get the best price for the vendor and that’s it. He’s working for the vendor and not you, so it’s kind of irrelevant that he’s the vendors son in law as thats what you would expect him to be doing anyway.
I’ve been in a multi offer situation before and it’s infuriating. The agent will never tell you you’re going into a multi offer until the last minute as it’s in the vendors best interest to have multiple offers and purchasers get shitty and can pull out when they find out, because no purchaser likes a multi offer scenario
My 2cents would be to try and remove emotion from the deal and work out what the business is worth to you. If you’re willing to walk away from it then tweak your offer a little but don’t go overboard. If you really want the business then tweak your offer accordingly and pay more
Lastly, it probably goes without saying but just because you’re in a multi offer doesn’t mean the other guys offer is as good as yours in terms of value or terms, so don’t assume that the other guy is definitely offering more than you
Good luck!
Don’t do business with this guy.
He’s lied to you, didn’t allow you to do effective due diligence, has tried to strong arm you…forget it. Walk.
Think about it – would you buy a *used car* from this guy?
If the answer is ‘no’, why the hell would you buy a *business* from him?
This broker sounds like a scumbag.
Suggest don’t buy the business
walk away…
Accountant here
If you are serious Make sure your offer is conditional on conducting due diligence and finance. Set a date for confirmation.
Get your accountant to look at the financials. Do DD on the customer base. Make sure the vendor has a restraint of trade. Get your solicitor to look at the lease and contracts with suppliers. Check out any trademarks. If physical product you are selling check for warranty claims on the vendor.
Don’t make an offer with a price until after you do your DD.
If they are serious they will sign a conditional ASP
Don’t let the agent play the games. Cancel and In Few weeks come back in if it’s still available. with a offer that is 5x lower than your original.
Edit for clarification