• Automotive Business Due Diligence

Wholesale Auto Parts Distributor: L.C. decided she wanted to own a business that would pay her at least $10,000 per month profit. She looked around and found an auto parts distributor that sold auto repair parts to mechanics. The business was located in an industrial neighborhood where many Auto Mechanics were located but not where there might be any retail customers. She was told the business was doing $70,000 per month in sales and producing a $15,000 per month profit. She was also told there was $300,000 in inventory that no one had verified. She paid $600,000 cash for this business and then paid the seller $25,000 for the $30,000 accounts receivable, outside of escrow, which she is told is current and collectable. Read more

Salon Business Due Diligence

In most of my writing, I talk about fraud and misrepresentation by sellers to buyers. I have come to realize that the problem is much deeper than I thought. The buyer’s and business names below are real.

Dr. Charles Partito is an experienced business buyer. He reports that he has bought eight businesses over the years. Of those, five of the purchases were what he expected and paid for. Two of the three bad deals, he had hired a professional to assist with due diligence, but he did not get what he thought he was paying for. Read more