What Business is Right for You?

Purchasing A Business? Find The Right One For YOU!

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Are you interested in purchasing an existing business? What type of business will you excel in owning? Start here with our help and save yourself stress, time and money!

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Consulting “By the Minute”

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Last week, at the end of the day, I was ready to go home, but because I had to wait for my wife, I could not. Not being one to lay back in my chair, and close my eyes, I had an idea. It has been months since I acted like a business buyer and went on the web to see who in the cloud also offered CPA Due Diligence services. To my amazement I came up on the first page!

Next, I put in due diligence services and I found dozens of listings related to due diligence computers. I am not young enough to compete with computers that do due diligence and I do not understand how a computer can even do “due diligence.” Will someone tell me how a computer smells fraud?   Read more

Find Your Passion In Your Work When Buying A Business

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The most common comments I hear from business buyers are “What is a good business to buy?

I am open to any business that can make me money” They also bring up this question whenever they find any company that looks interesting. “Is this a good industry to be in?” What they are not getting is that every industry is a great industry for the few doing well and a terrible industry for the rest of the world. I would say that 50% of all business owners just barely get by, 30% do average, and 20% of the business owners make a profit that they are proud of. It has nothing to do with what industry it is but everything to do with the management of the company.

So if it is all about the management, how do you know if you are going to be good top management material?

Well there are several things.

Let’s review some of those traits. Read more

Business Due Diligence or a Seller Warranty? Which is Better…

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The seller told the buyer “The books do not show all the money, but I guarantee you that this business will clear $10,000 a month after taxes.”

How often have you heard these words? Wouldn’t it be great if you could actually get a guarantee from a seller when buying a business? You can. But you have to ask for it, and you have to give the seller a good reason for them to give it to you.  Read more

Business Due Diligence or a Seller Warranty? Which is Better…

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The seller told the buyer

“The books do not show all the money, but I guarantee you that this business will clear $10,000 a month after taxes.”

How often have you heard these words?

Wouldn’t it be great if you could actually get a guarantee from a seller when buying a business?  You can. But you have to ask for it, and you have to give the seller a good reason for them to give it to you. I assure you a seller can have a lot of good reasons for not wanting to give it — and some are totally legitimate.

So, when are you justified in asking?

There are several conditions to look for. To find out what conditions to look for  Read more

Who Can I Trust?

When Making a Business Acquisition, Whom Can You Trust?

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When a business broker tries to play both sides of the buying and selling process, it can mean trouble for the buyer, seller, or both. Don’t get had by a “dual agent” broker.

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Adjusted Net Income

What is Adjusted Net Income?

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Depreciation and Amortization, IRS Taxes, Franchise Taxes, Interest Expense, Donations, Non-Recurring Legal Expenses or Non-essential expenses.

Other Expenses, Owners Medical, Life Insurance for Owners, Pension Plan contributions for owner’s family, Non-Essential Salaries, Health insurance (owner’s family portion), Owners vehicle expenses (lease payments, operating expenses, repairs, gas, depreciation and insurance), Magazine subscriptions, Owner’s Travel, Entertainment, Home office expenses and Home telephone expenses. Any other owners benefit that the seller has hidden in some expense account.

Real examples include:

  • Personal clothing listed as uniforms.
  • Family eating out listed under entertainment.
  • Children’s education listed under staff training.

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Dual Agent or Get Your Own? A Changing, More Aggressive Business Buying Market…

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Yesterday, I was reviewing a buyer’s signed purchase contract. He came to me after signing it, as his agent had said he should. His agent said he needed to hire someone to do the due diligence on the business. When I read the contract, I was shocked.

It turned out, in layman’s terms; the contract stated that the buyer was agreeing that:

  1. All paperwork had already seen
  2. What he has seen already was all that he was agreeing to be getting.
  3. The due diligence investigation time period had ended.
  4. Due diligence was approved because it was not disapproved, prior to signing this contract.
  5. Regardless, if he asked for more paperwork or not, if the buyer backed out he lost his deposit.

This was the most restrictive and dangerous contract I’ve seen in a long time. It makes any kind of real due diligence impossible, of course, since the buyer had already waived his rights to back out of the deal. The author of this contract was a dual agent.

Definition of a dual agent

Dual Agency in a real estate transaction means the listing broker represents both the seller and the buyer. A dual agent must not disclose confidential information to either party and must operate in a hands-off manner. A dual agent cannot get the highest price for the seller and the lowest price for the buyer — it is impossible. (Definition provided by about.com)

From what I’m seeing, dual agents are getting more aggressive these days in this market. This is   especially true of putting clauses in the contracts that are getting increasingly seller-oriented and box the buyers into corners, more than I’ve seen before. The dual agent is not always providing the legally required dual agent notifications that are given to buyers.

As the business buyer, you’ve got the upper hand, so please act like it. Get your own agent, who is not also your seller’s agent, and get your full due diligence done before releasing your due diligence review rights. And for the sake of your own easy life later on, don’t sign what you haven’t thoroughly read.

Please, do yourself a favor and don’t sign any paperwork, for a business, without reviewing what you’re signing, and making sure that due diligence or getting your deposit back aren’t going to be impossible.

Call me if you have questions, I’m glad to consult.

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Introduction to Due Diligence: How to Evaluate the True Worth of a Business: Due Diligence 101 or What You Don’t Know Can Kill You!

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This article is written as a general discussion on the subject of Due Diligence and how to evaluate a small business for purchase. It is for informational purposes and not intended to be a definitive guideline for your exact situation. You should consult the appropriate professionals with regards to your specific transaction or situation. Further, this article is in no way advocating, suggesting or implying that anyone engages in any type fraudulent activities whatsoever. These are simply things a buyer should be aware of when doing Due Diligence in buying a business. Read more

Two things you need to know before you buy an e-commerce business

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Make sure you have all the Paper Work you need before you Hire Someone to Do Due Diligence

In my years of doing due diligence for business buyers, the biggest complaint received from buyers is that the information presented on the web, or by the listing broker, does not match up with the information received from the seller after a deal has been negotiated.  Read more