Home – New Forums Starting your journey Business Broker Ways.

  • This topic is empty.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • #983931
    jezza11
    Member
    • Total posts: 5
    Up
    0
    ::

    Hi all,

    My self and my partner are currently in the market for a business, a beauty salon more specifically.

    Today we contacted a broker regarding a business that was in an area we where interested in and also within our budget.
    We got a “business brief” back off him, which practically was just the add which we first seen with a few added figures including wages and rent.

    I then asked them for a detailed profit and loss statement for the past two years and also recent BAS statements.
    Their reply to this was, ” as the business sale has no goodwill the profit and loss statements are irrelevant, And would only be available to a genuine purchaser “.

    To me, if i was to go to a bank to seek finance i would require these, along with other items,.
    So for me to become a genuine buyer id need to have these statements to go the bank?

    And even if there was no goodwill i am still purchasing the business and would still need to know weather the business performs well and has been managed well before i become a genuine or even interested buyer?

    Any insight as to weather i am just not on the right page or weather this broker is not worth even dealing with?

    Thanks in advance,
    Jeremy.

    #1144942
    RyanMcCausland
    Member
    • Total posts: 55
    Up
    0
    ::

    Hi Jeremy,

    This broker doesn’t sound like he’s worth dealing with, not sure how anyone could be a “genuine” buyer without having those details and more.

    I’ve had a few business brokers like this, some that won’t even respond to emails or calls, it’s like they don’t want to make the sale.

    I would put your foot down and tell the broker that unless he provides the figures you won’t be looking at it any further. In particular with beauty salons there are usually a lot on the market so keep looking and hopefully you will find some more user friendly brokers.

    Ryan

    #1144943
    jezza11
    Member
    • Total posts: 5
    Up
    0
    ::

    Cheers Ryan,

    As i thought.
    We have a few on our radar and if this guy doesn’t want to play he will potentially miss out on a sale.

    Thanks heaps, i just wasn’t sure if this was the way they usually deal as i have not had much to do with brokers.

    Jeremy.

    #1144944
    AgentMail
    Member
    • Total posts: 1,741
    Up
    0
    ::

    Hi Jeremy,

    I would be responding saying if they have a genuine seller, they will be happy to share this information.

    Usually, this is a brokers defence mechanism to a cash business that can’t produce strong documentation – and if it eventually comes through, will show a loss or a lot less than any claimed figures.

    If you are buying the business at the cost of fitout etc. it could be argued that it is not being sold based on figures, but then you have to use your own judgement as to what you can do with it.

    Best of luck and go with your gut

    #1144945
    Peter Jonsson
    Member
    • Total posts: 10
    Up
    0
    ::

    Hi Jeremy,

    I have dealt with a few business brokers for different clients. Good business brokers should be providing you with an “information memorandum” (IM) that details everything about the business, including financial data.

    As per AgentMail’s post there is probably limited data or the data is not great. With cash businesses like this be weary of comments that say the actual sales figures are far greater due to “cash” sales that don’t end up being recorded anywhere. If the asking price of the business is based on more than just the value of the fitout, equipment etc then you need to see the actual financial data.

    I have had past clients that have purchased cash businesses, for example a small independent supermarket, where the sale price was based on financial data that included actual reported income as well as “cash” income. Once the business was purchased and the new owner took over, the only income they were able to achieve was the actual reported income.

    As per Ryan’s post, if you don’t get the information you are after, keep searching as there are lots of businesses like this for sale.

    Hope you have some success and good luck with the new business venture.

    Regards,

    Peter Jonsson
    Business & Banking Consultant

    http://peterjonsson.com.au

Viewing 5 posts - 1 through 5 (of 5 total)
  • You must be logged in to reply to this topic.