Whenever you make an offer for a business and put down a deposit you are putting yourself at risk that it could be forfeited to the broker and/or seller. Here are a few things you can do to make sure that does not happen:
Business purchase deposit protection
- Write LOI (Letter of Intent). This is not a binding document, and no deposit is necessary. Then after you have agreed with the seller on the price and major terms, a formal offer can be written. At this point you can afford to pay to have the purchase contract reviewed by your attorney, or due diligence CPA, before being signed.
- Have any broker that insists on you making a written offer, before getting any real information put in the written offer that this offer is subject to your attorney or due diligence CPA review before it is valid.
- Do not give a deposit check before you have had your purchase contract reviewed line for line by an expert. Every broker uses a different offer form. Some are worse then others.
- Do not believe any broker that tells you that due diligence will be done after the opening of escrow. It must be done before escrow is open. Once escrow is open and your check is deposited, you have a very high probability of having a problem that might be irreversible.
- Read some of the Danger stories on my business buying services website before you think about signing your name to a check without having expert advice helping you.
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