Never trust a seller – check it out
May 20, 2021
by Jerry Bellune
An entrepreneur we once worked with was a hard-nosed negotiator. We didn’t like his style but we had to admire the little empire of more than 25 businesses in 3 states that he had built.
Most of his buys had been fire sales.
The owners wanted to retire. He might not meet their price but he offered more than any other buyer was willing to offer.
We worked with him on one buy, a failing business. The owner was deep in debt and had inoperable cancer.
In closing the sale he insisted on several stipulations. Among them was that his accountant had 60 days to audit the seller’s books and any undisclosed liabilities would be deducted from the final sale price.
The accountant spent 3 days going over payables, receivables, balance sheets, bank statements, billings and collections for the last 3 years. What a job. We were glad he did it and we didn’t have to do it.
The accountant found more than 25% of the sale price in undisclosed liabilities. That money then came off the purchase price.
The seller left with less money than he had hoped for and the new owner settled the debts for pennies on the dollar.
We share such field-tested ideas and strategies in our book “Million Dollar Strategies of Maverick Entrepreneurs.” For your copy, email [email protected].
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Copyright 2021, The Bellune Co., Inc
