Problems Later: What To Do When Due Diligence Wasn’t Enough



 

Buying a business can be a scary, scary thing. You’ve been over the numbers, you’ve sought expert advice and you’ve spent the entire due diligence period going over everything with a fine-toothed comb. Surely if there was some underlying issue or skeleton in the closet you’d have found it by now, right?

 

Well, maybe.

 

Businesses are complex, messy creatures. Taking the step into entrepreneurship by buying a business will require a bit of a leap of faith on your part.

 

Even if you go over everything line-by-line there’s a good chance there’s something you missed or something that couldn’t be foreseen.

 

Wait, what? I don’t want to buy a disaster!

 

If you’ve asked the right questions and spent your due diligence period actually doing your due diligence you probably won’t be walking into a mess. You will, however, be walking into a small business that will have it’s issues and ups and downs – it’s the nature of business ownership. There are going to be things that are completely out of your control, and you need to be mentally prepared for the things you will have to face.

 

Going into the process of buying a business already knowing that there will more than likely be problems somewhere down the line will better equip you when those issues come up. It’s far easier to deal with a problem you were expecting than to be blindsided.

 

This isn’t to say that you should be paralyzed by fear that the business you are buying has some hidden fatal flaw. You just need to remember that business ownership is inherently risky, so mentally prepare yourself for those risks and you will be ready to handle them when they happen.

 

Are you thinking about buying a business but are worried about hidden issues? Would you like to know more about the due diligence process? Please ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com


Neat Paperwork Is Vital – Prepping Your Business For Sale



 

 

With tax day recently come and gone, as a small business owner you might think your your bookkeeping responsibilities can take a back seat for a while. They shouldn’t, and if you’re considering selling your business anytime in the near future they definitely should be kept front and center.

 

Why?

 

Selling your business is a big responsibility that takes a great deal of time and energy. You don’t want to be in the midst of the selling process and realize that your books won’t hold up to careful scrutiny by a buyer. The value of the business and the validity of your listing price are dependent on withstanding that scrutiny. A jumbled stack of paperwork isn’t going to cut it.

 

Boxes of receipts need to be sorted, scanned and accounted for. Contracts should be kept in one place and kept sorted. Employee documentation should be organized in some fashion. Tax documentation should be legible and organized as well. Current P&L statements should be kept with frequently pulled P&L statements that show your business as it fluctuates month to month and year over year. You get the idea.

 

Imagine the stress of trying to compile and organize all of this documentation while in the midst of the sales process, particularity if some sort of personal crisis is forcing you to sell quickly. Losing the all-important first impression with a prospective buyer because your ducks weren’t in a row is 100% preventable. So is keeping your stress level to a minimum during the selling process.

 

You can avoid this particular pitfall if you get your books in order now and keep them that way. If you haven’t been keeping track of your business accounting, then buying accounting software or enlisting the help of a business account can be extremely important in helping your business put it’s best foot forward when you decide to (or need to) sell.  Showing up to the first meeting with buyers with neatly collated binders and files will show that not only do you care about your business, you’ve been keeping up with everything that’s important. Prioritizing your books will speak volumes about what kind of business owner you’ve been – and the health and potential longevity of the business overall. 

 

Another note: Use a business CPA or a business transaction accountant when you are going through your books. Someone who has never assembled the paperwork of a small business is not going to understand the nuances of getting your business books in order. If you need help finding someone, your business broker will be able to point you in the right direction. 

 

No one likes to do paperwork, but if you own a business and want to sell it someday – you’re going to need to get that paperwork in order. If you need help, talk to a business broker about what you would need to do to get your business paperwork ready for buyer’s eyes.  

 

Did this article resonate with you because you have a huge box of unorganized paperwork under your desk? Would you like to know more about what documentation buyers are going to want to see? Do you need help getting your business ready to sell? Please contact us today or leave any questions or comments here, we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com


Face-To-Face? Nope. Why Conference Calls Are Important.



 

Some people just like to have meetings. We get that, and it’s a request we get a lot. In a few cases meeting face-to-face with the business seller so you can watch their mannerisms and facial expressions might help you learn a lot about how that person conducts themselves.

 

However, in today’s small business marketplace it’s much more likely that you will do the majority of your meetings via conference call. 

 

Why?

 

Business transactions require a lot of moving parts. The schedules of the sellers, the buyers, the brokers involved and the attorneys involved all need to be considered when trying to figure out when a meeting could take place. If this meeting is to take place at the business that is for sale, it will also have to be scheduled when employees are not present for confidentiality reasons.

 

If you’ve every tried to get 6 or 7 people together for anything at the same time you can imagine how tough that can be. As such, if you are serious about buying a business you are going to have to concede that the majority of initial meetings are going to have to be held over the phone.

 

Conference calls can be taken in a car in the parking lot while the seller is away from their staff. They can happen while the seller is at home. They can happen over lunch breaks or even behind a closed office door.

 

Asking for physical meetings may seem important – but in business transactions they really don’t matter. When you are buying a business you aren’t buying a physical space. You are buying cash flow, so the aesthetics of said space are far less important than the numbers the business generates. Those numbers can be communicated to you via email or share files online and then discussed via conference call, so there is no need to spread paper out on a table and stare at each other in the face.

 

Heading into the business buying process with the understanding that most of your communication with brokers and sellers will be through conference calls will help you to navigate the process more successfully.

 

Wait, does this mean we never meet face-to-face?

 

Absolutely not. Face-to-face meetings are an important part of the business buying process – they are just far more useful much further along in the transaction process. Any initial questions can be answered over the phone and don’t require the scheduling nightmare that meetings sometimes are.

 

Another note – demanding everyone constantly travel to meetings will probably only aggravate the seller and other professionals involved to the point where they might refuse to work with you in the future. If you do make appointments for meetings, do not cancel unless absolutely necessary. Making everyone bend and adjust their schedule and then casually canceling last minute for something other than a dire emergency only shows your lack of respect for others in the transaction and your lack of commitment to seeing the sale through.

 

The point here is you need to be sensible and realistic when asking for meetings versus conference calls. Listen to the advice of your business broker when they tell you one would be better over the other in your current situation. Most things can be accomplished in a phone call that doesn’t require schedule juggling and travel time for everyone involved.

 

Are you thinking about buying a business and would rather have face-to-face meetings? Would you like to know more about how most things can be accomplished via conference call? Ask us! Leave any questions or comments here.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com


A Deal Between Friends Or The End Of A Friendship – Why You Need A Business Broker



 

You’ve been going to your friend’s bar for years. You even helped him paint the bar top when he first opened. Now he’s ready to sell and you think you’d like to buy.

 

Buying a business usually requires the assistance of an experienced and qualified business broker because business transactions are inherently tough.  The process of  buying and selling a business is complicated.  Lengthy and detailed purchase contracts need to be negotiated, commercial landlords and property managers need to be negotiated with, licenses and permits need to be obtained – the list goes on and on.

 

Owning your buddy’s bar might fit with your goals for business ownership and you might be able to afford his reasonable asking price – so you might think that there’s no need to enlist professional help to get the deal done. Just a handshake between friends should suffice, right? 

 

While going it alone might seem like a good idea because it’s just a transaction between friends – you dont want to end up in a situation where your friendship is lost over the complications that always arise in a business sale. Complications will absolutely, positively happen. You can not avoid them.  Using a business broker for your transaction will give the two of you as friends a buffer when those complications come up and will allow both sides to get what they need when they need it.

 

Many first-time business buyers and sellers don’t understand all of the nuances and important details that need to be addressed in the purchase of a business. For example, you don’t want to write your friend a huge check only to find out too late that the landlord of the commercial space refuses to transfer the bar’s lease to you as a new tenant. There are a million things that can (and maybe will) go wrong. Having someone involved who has been through the process many times will be essential for success

 

You also should include a business broker if any seller financing is going to be involved. Seller financing is essentially a loan, and in this case a substantial loan from a friend. Friendships have been lost over far less – so using a business broker to help with the seller financing portion of your purchase contract will ensure everyone knows upfront what is expected and what the ramifications are for reneging on the deal.

 

Money and business shouldn’t come between friends, so enlisting the help of an experienced and qualified business broker will ensure that the friendship can outlast the business transaction. Mixing your personal and business life requires everyone to be upfront, honest and on the same page. It also helps to have a buffer should anything go sideways. A business broker can fulfill both of these needs. Protect yourself, your friendship and your future as a business owner by hiring a broker to help you with your transaction.

 

Are you considering buying a business from a friend but aren’t convinced you need the help of a broker? Do you have questions about what a purchase contract entails? Ask us! Leave any questions or comments here and we would be happy to help.

 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com


Keys To Business Transaction Success – Don’t Stalk Your Broker



 

We know that buying a business is a very stressful endeavor. Selling a business isn’t any easier.

 

Guess what? The person at the center of that stressful and difficult situation isn’t always in the land of sunshine and rainbows.  They’re there to keep the transaction on track. That person is a business broker. 

 

A business broker’s day is full of sending and receiving emails, conference calls, travel to and from meetings and the meetings themselves. When they aren’t in direct communication with one of their clients they are putting together listing packages, writing purchase contracts, dealing with bureaucratic licensing issues – they’re very busy people.

 

 

A business broker’s job is to act as a buffer during negotiations and get a transaction to closing. They are there to help sellers get their business ready for market and there to help buyers find a business that fits with their goals. A big part of a business broker’s job is talking to everyone involved – keeping the business transaction on track by making sure everyone is getting what they need when they need it.

 

Your transaction is, obviously, a big deal to you. It’s probably the one major thing you’ll have going on in your life. If you’ve got a good broker your deal will absolutely be a priority – but an important caveat to remember is it won’t be their only priority.

 

If you hired an experienced and qualified business broker, then you probably aren’t (and shouldn’t be) their only client. If you call, text or email your broker, you should expect a response in a timely fashion. Timely, however, does not mean instantaneous. If a broker doesn’t answer the phone during business hours, perhaps they’re in a meeting or on a phone call. An unanswered phone call doesn’t mean you should then call them an additional 30 times in a few hours. A constant barrage of requests for contact be they calls, texts or emails isn’t going to get a quicker response. All this lightly-stalker behavior will do is complicate the day of the broker who’s trying to help you. Call once, and if you don’t hear from your broker in a realistic amount of time send a quick text or email to follow up. That should be enough.

 

A note here. If they aren’t getting back to you at all, where you go days and days without a response – then perhaps you need a different broker.

 

You should also remember that business brokers have lives outside of work just like you do. If you call at 10 at night on a Friday or at 7 in the morning on a Sunday, you probably shouldn’t expect a broker (or anyone for that matter) to immediately return your call.

 

Calling or texting constantly doesn’t help your broker help you through your transaction, all it does is fill up their inbox and make it impossible to get back to everyone in a reasonable amount of time.

 

Calling over and over again isn’t going to get you an answer any quicker, especially if the information you need is coming from the other side of the table. Sometimes your brokers hands are tied if the other side of the transaction isnt being cooperative. Business transactions are big and messy, and can sometimes involve buyers, sellers, buyer’s brokers, seller’s brokers, buyer’s attorneys, seller’s attorneys, CPAs – the list goes on. Having to get a single information request through that string of very busy people can sometimes take a few days. If your broker says they’re on it and they’re waiting for a response, calling them 16 times a day isn’t going to get the information any faster.

 

Keeping realistic expectations in terms of response times from your broker, along with a good dose of patience for all of the parties involved, will help immensely in getting your transaction all the way to closing.

 

Are you looking at businesses to buy and want to know more about how a business broker can help you? Have you thought about selling your business but have questions about the selling process? Please feel free to leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com



Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907




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