The Justifiable Offer: Why A Low-Ball Is A Bad Idea

You’ve done the searches. You’ve analyzed your options. You’ve done a few conference calls with sellers and you think you’ve found the right business for you. Your next step is a big one, and your decisions here can absolutely make or break your chances of buying this business. It’s time to make an offer.

 

Your offer is important for a number of reasons. The offer you put together (if accepted) will become the purchase contract. This contract will include not just the final sale price but many other parts of the transaction that will need to be negotiated. Think the length of your training period, the terms of the deal and how existing contracts will be assigned – just to name a few.

 

This all-important document essentially contains all the parts of your deal that will need to be negotiated. The fluid nature of an initial offer/purchase contract means the first version – your version – is just a place to start those negotiations. It should go without saying that you need to start off on the right foot. 

 

 

The relationship you have with the seller, although not a permanent one, will be critical to the success or failure of your transaction. You have to talk to this person, meet with this person, iron out a deal with this person and then most likely work side by side with this person during your training period.

 

This is not a relationship you want to start with a perceived slap in the face.

 

What do we mean by that? You do not want to low-ball a seller just to see how desperate they are or how great of a deal you can get. People who intentionally low-ball business sellers aren’t business buyers. They’re tire-kickers. Your initial offer speaks volumes to a seller about how serious you are and what it’s like to work with you. You are making a financial offer for something that seller has invested countless hours in, has spent years building and has made sacrifices to maintain. Yes, business transactions shouldn’t be emotionally driven, but in the small business market it really can’t be helped. No one wants their blood, sweat and tears treated like a cheap car.

 

What should you do instead?

 

Make a JUSTIFIABLE offer.

 

A justifiable offer is a simple concept – it’s something based in reality and backed up by data. You’ve looked at the numbers, you’ve considered the current market and you’ve come up with a number that makes sense – not the lowest, rock-bottom price you’d love but something you feel (based on the data you have) is fair.

 

Making a fair offer tells a seller that although you may not want to give them their full asking price, you are a person interested in making a deal happen. You are someone who values their business and all they’ve invested. 

 

How do I make sure my initial offer is fair? Talk to your business broker about what you’d like to offer, and then listen to their advice. They know the market, and can give you insight into whether or not the number you’ve come up with will be a good point to start negotiations.

 

The message here is simple. If you are serious about buying a business the best way to start your transaction is by making a fair and justifiable offer. 

 

Have you looked at businesses and want to know more about how sellers come up with their listing price? Do you have questions about what an initial offer/purchase contract entails? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Buying? Why Are Good Businesses For Sale?

 

If you are someone who is interested in buying a business, you are more than likely looking for a profitable business that has a good share of the market and a great location. You are probably not going to be willing to buy a business that is on the fast track to failure and bankruptcy – so as you begin searching for businesses you may have pondered a pretty big question.

 

Why would anyone sell a perfectly good business?

 

This question is a very important one to ask as you search for businesses, and it is a question that any business seller should be willing and able to answer. If you are unable to get an answer from a business owner, this could be a major red flag.

 

Here’s something many people don’t understand. Most of the reasons for selling a business have very little to do with the business itself. A large percentage of the time a business is on the market because of the personal life of the owner, not because the business itself is somehow in trouble.

 

Let’s look at some reasons for selling that have more to do with the owner than with the business:

 

Retirement. This one goes without saying. An owner who is ready for another chapter in life is willing to sell a perfectly good business so they can move on.

 

Divorce. When husbands and wives are partners in a business, sometimes the business gets sold as part of the divorce.

 

Partnership disputes. Most partnerships start well, but not all end that way. If there is a breakdown in a partnership where both parties want out, it can mean putting the business on the market.

 

Medical reasons. If the owner or a member of their family has a medical condition that will take precedence over the business, or will keep the owner from being able to run the business, the business will likely end up on the market.

 

The kids decided not to follow in the family footsteps. Many small business owners have their children work with them in the business, but when the time comes for mom and/or dad to retire the kids may want to do something else.

 

There are many reasons that a perfectly good business ends up on the market, the key is to find out the real reason the owner is looking to sell. If the reason has little to nothing to do with the business itself, then you are looking at a potentially great business acquisition.

 

Are you looking for a business to buy, but have come across many that seem too good to be true? Do you have questions about how to find out the real reason a business is for sale? Leave us a comment or question here, and we look forward to working with you on your road to business ownership.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

 

 

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Follow The Rules: How To Keep From Killing Your Deal

Buying a business can be (and often is) an intensely frustrating process. When you have questions, when negotiations are in full swing – even getting initial information usually means you spend a lot of time waiting. Waiting for the seller’s broker to contact the seller. Waiting for the seller to get together the documentation you’ve requested. Waiting for an attorney to look over a contract. Waiting for approval by your new commercial landlord. Waiting for licensing and permitting requirements to go through. It takes an enormous amount of personal patience to see it through.

 

This huge patience requirement can make you feel a little crazy – maybe even crazy enough to try and push the process along by yourself.

 

What do we mean by that?

 

The process of buying and selling businesses comes with a rather rigid set of rules. The majority of those rules seek to protect the deal on two fronts. They protect the confidentiality of the transaction itself and they protect the buyer and seller from each other.

 

Why does a transaction need confidentiality and why shouldn’t you push to break it? Breaching confidentiality might not only kill your deal, it could potentially cause a fatal blow to the business you are hoping to buy. Business sales happen under a strict veil of confidentiality for a few very important reasons.

 

The most important of these reasons is the incorrect but pervasive assumption that a business for sale is a business on the brink of failure. This notion can destroy a business if the news gets out that it’s on the market. Employees can panic and leave. Clients can cancel big contracts. It can be devastating. As a buyer you have to keep the for-sale status of prospective businesses under wraps. You will not only be required to sign non-disclosure agreements – you will be forbidden from talking to staff on your own, from emailing the owner directly (in many businesses the owner’s email is accessible to their staff), from calling the place of business and asking for the owner, from visiting the premises without permission, etc.

 

While it might be tempting to email or call the seller because you’re tired of waiting for the brokers and attorneys involved to get you the information you’ve been asking for – don’t. One seemingly insignificant point of contact can cause a disastrous cascade. The rules exist for a reason. You have to follow them.

 

This leads us to the second set of rules that protect the buyer and seller from each other. Even if you are following the rules that protect confidentiality to the letter, it might be tempting to bypass the intermediaries and talk one-on-one with the seller (if you somehow have their home phone number, for example). Don’t do this either.

 

Why?

 

The better question is why do the intermediaries, the business brokers, exist? They exist because the complex tangle of a business transaction requires experience and it also requires a buffer. A seller is selling their blood, sweat and tears – something that may be their life’s work. They have a deep personal connection to their business – and a buyer can quickly and easily derail a deal by asking the wrong question, by making an innocent assumption, by saying the wrong thing. Those questions and remarks can offend a seller to the point that they will refuse to work with you – and your deal is dead.

 

Follow the advice of your broker and keep the flow of communication between you and the seller flowing through the people who you hired to keep your deal on track. Negotiations are far easier when the seller is still willing to talk to you.

 

The message here is the rules that cover your business transaction are there for a reason. Someone, somewhere messed up their chances of becoming a business owner – and their cautionary tale will keep your deal safe.

 

Are you a business buyer who thinks the rules are a pain and want to know more about why they are so important? Do you have a story about a derailed deal that could have been protected? Please leave any questions or comments here, and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

 

 

 

 

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How To Buy The Family Business When You Aren’t Family

If you think about the quintessential small business, you likely see a family-run business – one owned by mom and dad and staffed by children and other family members. While the initial intent of many family business owners may have been to pass the business on to the next generation, there are many times when these family businesses go on the market instead.

 

 

A family business on the open market can be a good buy for a business buyer because they are typically run with a lot of drive, passion and care – all of which translates into a strong and successful bottom line.

 

Problems can arise, however, because the person buying the business isn’t a member of the family.

 

I’m looking at buying a family business, what problems might I face?

 

First, you may have a hard time keeping critical staff after the transition because those critical staff may be related to the original owners. The loyalty for those original owners can be hard to replicate, so you as a buyer need to make an effort to get to know each member of the family who works in the business (and plans on staying) and understand what their roles and responsibilities are. Building a good relationship with each family member will help to keep them on your payroll – and hopefully also keep their loyal clientele.

 

This leads us to our next issue. Many family businesses retain their customer base because that customer base has loyalty and trust for the family. As a new face within the business, you will need the current owners of the business to help you with maintaining that customer loyalty. You can work on customer retention by having the seller introduce you to important regular customers and by possibly keeping the seller on as a consultant for a time after you purchase the business. The key to a successful transition is consistency – which leads us to our last point.

 

The final problem many buyers run into when purchasing a family business? Making too many changes too fast. The business you are buying is successful because the family that runs it runs it in a specific way – a way that keeps the customer base happy. Every business buyer wants to make their own mark, but massive changes right out of the gate in an already successful business will more than likely end in disaster. Changes are possible, but a buyer needs to take the time to see what parts of the business work.

 

Buying a family business can pose a special set of challenges, but those challenges are worth it when family-run means a great buy.

 

Do you have questions about buying family-run businesses? Would you like to know what family businesses are currently on the market? Please feel free to leave questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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How To Get Your Deal To Close – Managing Reality and Expectations

No matter what the economic climate looks like, there are always businesses changing hands. Buyers and sellers are always working together – but even in the most favorable of circumstances some deals are destined to die. 

 

Why?

 

The main reason that deals fall apart before they hit a closing table? Unrealistic expectations

 

Business buyers and business sellers come into the business transaction process with an idea in their head of how that transaction is going to go and what they will get out of the deal. The problem with this initial vision is they are almost always an impossible reality. Businesses and business transactions are complicated, messy and involve many moving parts and personalities. Considering your business transaction with a focus on reality will help you immensely in having a successful sale or purchase.

 

 

First and foremost, there is no possible way that you are going to get everything you want. If you are buying a good business, you are not going to get it for a rock-bottom price. If you are selling, you are not going to get 10 times what businesses like yours are actually selling for. Business deals are full of negotiation – and not just about price. You will have to negotiate things like the length of due diligence, the length of the training period, the terms for seller financing, the clauses of a new lease – the list goes on. Be realistic in the negotiation phase of your business transaction. Go in knowing that there will need to be a lot of give and take from both sides of the transaction if you are going to get a deal done.

 

Another major issue that requires a reality check? We’ve already mentioned it – personalities.

 

There are a lot of people in a business transaction. There is a seller, a buyer, a couple of business brokers, business transaction attorneys, CPAs, landlords and property managers – and each one of these people will be seeing the transaction unfold from their own unique point of view. You need to be realistic because there are going to be times during the negotiation that one or more of these personalities are going to clash. For the most part, differing opinions can be sorted out, but only if all sides stay in the negotiation. Going into your business transaction with the understanding that problems will absolutely be a part of the game will help you see the end goal instead of focusing on temporary personality clashes.

 

Keep your expectations in the realm of reality and you will have a much better chance of reaching a closing table.

 

Are you thinking about selling your business and are curious about what businesses like yours have actually sold for? Would you like more information on the process to buy a business? Please feel free to leave any questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Buying A Business In 2020? What The Q2 BizBuySell Report Says For You

BizBuySell’s Second Quarter Insight Report shows what a roller coaster of a year 2020 has been. There was a promising start, then March hit and the business-for-sale marketplace sort of ground to a halt. None of this is news to prospective business buyers, as many who were already looking or were engaged in negotiations when the bottom dropped out saw lending dry up and deals fall apart.

 

Guess what? There’s finally some good news.

 

The Q2 Report shows that the small business market is picking back up again.

 

 

Here’s what you need to know:

 

The market is slowly returning to normal, with 71% of the owners surveyed saying they are back to work and open after the initial shut downs.

 

Many buyers are currently seeking pandemic-proof businesses – so much so that these businesses are booming. What do we mean by pandemic-proof? All across the country consumers are adjusting to a new normal where take-out food and delivery services are in high demand, where school happens at home and the majority of shopping is done from a couch – and the businesses that have adapted their model to continue producing throughout the pandemic are now at the top of buyer’s lists. The new Insight Report shows some 60% of prospective buyers are currently looking for a pandemic-proof business. What does this means for you as a buyer? If this is the direction you want to go, you’ll need to act fast when these “essential” businesses hit the market.

 

Another section of business buyers are searching for businesses in trouble, some 28%, hoping that with a rock-bottom price and some patience they can turn the ship around. If you are a buyer looking for one of these low price deals, be careful. You shouldn’t buy a depressed or closed business just because the price is good. You should have a clear plan in mind to get the business back on it’s feet again and have metrics in place as part of your business plan that give you a definitive point to pull the plug and move on.

 

In the industries that were hit hardest by the shut downs, another opportunity for buyers revolves around the sudden glut of built-out commercial spaces that are suddenly available. With many businesses deciding to keep their doors closed despite the reopening of local economies – many down on their luck business owners are selling in order to get any return on their now permanently closed business venture. Some 58% of current business owners who are doing well are actively looking for other businesses to buy in order to expand into those now vacant (and sometimes coveted) locations.

 

The point here is although the market is nowhere near where it was at the very beginning of 2020, it is showing some signs of life again. A careful, creative and motivated buyer can make the best of the current market and find themselves a booming pandemic-proof business or one at a low, low price. Talk to your business broker about which choice would be best for your situation.

 

Do you have questions about what the Insight Report says about the current state of the business-for-sale marketplace? Would you like to know what opportunities are available in your area? Please fell free to leave any questions or comments. We would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

 

 

 

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Unexpected Problems: What To Do When Your New Business Gets Sticky

You’re a brand new business owner and you’ve successfully navigated the path of purchasing a business. You took your time and really delved in during due diligence. You paid close attention during training with the seller and took copious notes. You’re pretty sure you’ve got the hang of this new business, and that you know everything about it.

 

 

Until you don’t.

 

Suddenly there’s an unforeseen problem. Something you didn’t find during due diligence. Something that happened out of the blue.

 

What can you do?

 

It depends. If a seller purposefully withheld something like a fatal flaw you will likely have some kind of recourse. If this is the case, call your business broker and discuss what options are available.

 

What if it’s not a secret fatal flaw? Then what?

 

Roll up your sleeves and get to work. Business ownership is tough stuff, and sometimes no matter what’s being thrown at you – you just have to find a way to persevere.

 

For instance, say you just bought a restaurant. Shortly after you take over the whole staff quits because they can no longer get away with things the previous owner allowed. Although a potentially rough situation, it can be solved by working some shifts yourself while you hire new staff or temporarily limiting the restaurant’s hours until you can right the ship.

 

What’s important to remember when you hit those initial and inevitable bumps in the road is no business is perfect and no business is smooth sailing. You are going to encounter problems – your success or failure as a business owner depends on what you do when faced with those problems.

 

It is also important to remember that the buck ultimately stops with you. If you aren’t willing to work with a staff who wants to get away with whatever they want – it’s not the previous owner’s fault when that staff quits en masse. It’s yours. Deal with the fallout and do what you need to do to get a new staff in place. Business buyers who sit on their hands and blame everyone but themselves are probably going to have a hard time as entrepreneurs.

 

The message here is you can research all you want and learn all you can about your new business and still end up with unexpected problems right out of the gate. Just remember that with some thought and hard work you and your new business can overcome anything.

 

Are you considering buying a business and want to know what recourse you might have if a seller hides issues? Do you want to know more about how you can find and deal with potential issues during due diligence? Ask us! Please leave any questions or comments, we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

 

 

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Selling? Why A Business Broker Is An Absolute Necessity

Are you thinking about selling your business and having these thoughts? 

 

I’ve owned a business for years. I know what I’m doing, why would I need someone to help me sell it?

 

Guess what? You absolutely need someone to help you sell your business – especially now in these uncertain times. That person is a business broker and they will be pivotal to your success in the business-for-sale marketplace.

 

 

Why? 

 

You have put your blood, sweat and tears into your business to make it what it is today. When you sell your business, you want to get as much as possible for all of your hard work, and a business broker has the ability to do that for you.

 

Business owners are smart people, and they are great at what they do. Does that mean that they are qualified to sell their own business? Probably not.

 

A business owner has knowledge and expertise in their own industry, and the success of their business depends on their ability to focus on keeping the business going. A business broker has knowledge and expertise in the world of buying and selling businesses, and as a business seller you will need and appreciate this expertise throughout the selling process.

 

A business broker has the time to focus on selling your business, and the know-how to keep the whole thing confidential. This confidentiality is crucial if you don’t want to risk losing clients, vendors, and employees if the word gets out you’ve put the business up for sale. Brokers also have the ability to reach far more potential buyers than you could on your own. They belong to networks and have access to databases where they can market your business confidentially. Business brokers also know buyers who are on the lookout for specific kinds of businesses, so as soon as yours goes on the market, they will likely have people who may be interested. A business broker has a great deal of business marketing experience, and knows how to put together a marketing package that will bring the right kinds of buyers to you. They are then able to act as an intermediary between you and any potential buyers.

 

Most importantly a broker takes the pressure of the sale off your back so you can focus on doing what you need to do in order to keep the business moving in the right direction. 

 

Don’t take so much on your shoulders by trying to sell on your own. Get the right help.

 

Are you considering selling your business but still don’t think you need a broker? Would you like to know more about how a business broker helps you sell your business? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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When To Jump: Thoughts For Business Buyers In 2020

These are interesting times, to say the least. Making the call to buy a business and jump into entrepreneurship was a difficult decision before the pandemic invaded all of our lives – now it seems like an impossible decision to make. 

 

 

Should I really buy a business right now?

 

If living through this madness has you rethinking all of your life choices and has you seriously considering making the jump – then you still can if you do so with the right planning and a good dose of flexibility. 

 

If you were seriously considering buying a business before the madness, the madness doesn’t necessarily mean you should stop. Whether entrepreneurship was the plan then or suddenly now, you should take another look at the businesses you consider and ask this question – will this business help me meet my goals for business ownership?

 

Defining your goals for business ownership will be pivotal to finding the right business for you – one where you can be successful and achieve the life you are looking for. Think about how much money you need to make to keep your life moving. Think about what you want your work week to look like. Think about how many hours you are willing to work everyday. Think about how much money you want to realistically spend right now. Think about jobs and industries where you think you would do well. 

 

These considerations will be very important, as will the ability to be flexible. You might have your heart set on a specific type of business, but buying that business will be an exercise in futility if that business meets none of the goals we discussed above. The current world we live in will also play a part in what business will meet your goals. For instance, if you are a buyer without a lot of free cash available, it’s probably not a good idea to buy a business that can be affected by shutdowns – you won’t have the cash to sustain it.

 

The message here is that business ownership is still in cards if you want it to be. There are good businesses for sale and with the right planning and forethought you can find one that will meet the goals you have for your life.

 

It probably also needs to be said that not only will you need to be flexible with your initial business choices, but also with the process. There are new protocols to keep everyone safe – so meetings will need to be planned ahead of time or take place via conference call or Zoom, masks will need to be worn for on-site visits, documents will be signed electronically instead of in person and requests may take a bit longer than they once did.

 

If you want to buy a business, you can. If you have questions – about the businesses that are currently for sale, about the changes to the business buying process, about how you can find a business that meets your goals – ask us! Please feel free to leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

 

 

 

 

 

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Dream Bar Or Huge Mistake – Meeting Your Goals For Business Ownership

We all have that daydream. You sit at your desk at the accounting firm where you’ve worked, well, it feels like forever – and your mind begins to wander. In your daydream you own your own business, like a famous downtown bar. You, the charming owner – are a friend to every regular. You spend your evenings sitting in a bar stool with your name on it, casually having a beer and mulling over the receipts for the day.

 

 

Everyone has this daydream. It’s a pleasant break from the drudgery of the day. The problem with this daydream, however, is it can quickly become a nightmare if you try to make it a reality. We talk people out of this scenario all the time, and for good reason.

 

What? Aren’t you someone who sells businesses? Why would you try to talk me out of my dream bar?

 

For starters, owning your own business and owning a business in the restaurant industry are not for the faint of heart. Entrepreneurship is hard work. Successful bar owners aren’t having a beer and casually going over receipts. They are behind the scenes grinding out new marketing strategies, dealing with vendors, filling in behind the bar when it gets busy, making schedules, training new staff, tweaking the menu, fixing broken equipment – the list goes on and on.

 

Secondly, if all of your work experience is at an accounting firm and you’ve never spent a single day of your working life in the restaurant industryyou have no business buying a bar. Business ownership is tough, and that road becomes impossibly tougher when you compound the problems you will face as a new owner by adding the learning of a whole new industry to the mix. Think of all of those reality shows where they go into failing restaurants and bars and try to turn things around. In almost every episode where the business is in catastrophic free-fall, the major problem is the owners had zero restaurant experience when they took over.

 

We don’t want to talk you out of your dream, we just want you to think of it in a realistic light. What is your dream really about? It’s not really about the bar itself. It’s about the freedom to be your own boss. It’s about having a personal connection with your clients. It’s about doing something different than you are right now. Guess what? You can have all of those things without buying a bar. As a matter of fact, owning a bar would be the exact opposite of those things if you are walking into bar without experience.

 

There are a myriad of businesses for sale, and many will meet those all-important goals for business ownership while also being in industries where you have experience. Talk to us today about the types of businesses we would recommend for someone with your resume and goals. You might be pleasantly surprised what’s out there that’s just right for you.

 

If, by the way, you do have loads of restaurant and bar industry experience – by all means, buy a bar. Finding the right business instead of the wrong business is all about matching goals and experience.

 

Are you curious about what type of business would meet your goals and match your experience? Do you have more questions about the business buying process? Please feel free to leave any comments and questions, we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

9040 Town Center Parkway
Lakewood Ranch, FL 34202




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