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  • #978641
    Busy Working Mum
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    • Total posts: 17
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    Hi

    I am looking to buy an existing business. I have seen my Accountant, Small Business Bank Manager and a Business Mentor. I have been finding it really hard to get what i consider to be vital information from the real estate agency selling the business and the vendors (via the real estate agency). This is proving to be quite frustrating and i am actually questioning if the vendors want to sell their business!

    Maybe i am being over picky doing my due dilligence? Is it not reasonable to be provided with a list of the assets of the business? What i received back is a Depreciation Schedule with a figure on it. That is all. The vendors sent me an email with some items listed on it, but when i went to view the premises, there was other equipment there which they had not listed, which they claim to have over looked. Shouldnt my request be standard? How do i know what i am going to get if i buy the business? Maybe their own cars are in the depreciation schedule? Items sold or broken may still be listed or maybe when i take over the shop, half the equipment will walk out the door!

    I have got the Section 52 Vendors Statement now, but nothing on there about a list of the assets. I also asked for a floor plan of the shop (as i want to make alterations), which resulted in a badly drawn floor plan by the real estate agent, which isn’t at all accurate.

    As i have never bought a business before, i was assuming the real estate agent would be more helpful and actually know what the whole procedure was. In addition, i know if i wanted to sell my business, i would fall over myself giving prospective buyers as much information as possible.

    I would be grateful if anyone can advise what should be provided to a buyer in the way of what assets are being sold with the business.

    Thanks :)

    #1108486
    JacquiPryor
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    Hi There,

    I don’t think you are being picky at all! You of course need to have all of your ducks in a row to make a decision on buying a business – it’s a big decision, massive investment and not one to take lightly – so, don’t feel ‘annoying’ or ‘picky’ for asking for this sort of information.

    In addition to the list of assets, if you are buying a business then you should also obtain financial records, I would say for at least the past three years if available. You also need to consider & know what intangible assets are included in the sale versus simply the tangible or physical business assets.

    Depending on the type of business, they may (for example) own Intellectual Property (copyrights, patents, designs, trademarks etc) – sometimes these things are actually owned by the business operators personally rather than the ‘company’ – so you would want to be sure you are buying these sorts of assets too.

    If the vendor’s agent is proving a little difficult to communicate with, consider employing your own agent or business broker to correspond on your behalf – they would be quite familiar in the broking of business sales, and therefore the sorts of information that should be disclosed to prospective buyers and be able to advise on what that information then means. There are plenty out there, but I do know of a site (businessforsale.com.au) that can help give you an idea of value of certain business types/locations, and also allow you to search for agents/brokers.

    Wishing you all the best with it :)

    #1108487
    Evo the marketing guy
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    Yup. Horrible doing DD when the business is a record-keeping shambles!

    Not an uncommon story.

    My DD list was very comprehensive but the owner had such poor record keeping that many of the items on my list could not be validated to my full satisfaction. The final purchase price, however, reflected this uncertainty.

    It would have cost me many more months to do DD – so I sucked up some of the unknowns. And you know what, for every bad unknown I stumbled across come ownership, I stumbled across some great ones as well!

    Another option is that you do an asset walk with the owner and write down everything you see. Then put your list in the contract for sale.

    Add in a clause that says everything is in good working order – or needs to be fixed prior to sale.

    But assets lists, and detailed financials (citing all bank statements) is not negotiable…

    #1108488
    Busy Working Mum
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    • Total posts: 17
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    Hi
    Thanks very much for the advice. Much appreciated. Guess what arrived in my ‘Inbox’ yesterday afternoon!….a comprehensive asset list!!..Thanks!

    #1108489
    JacquiPryor
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    It’s funny how that happens.. you get to the point of thinking “right, I am going to ask what others think about this situation because it doesn’t seem quite right” and then everything starts falling into place. Hope all goes well for you :)

    #1108490
    StellarScott
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    Busy Working Mum, post: 120557 wrote:
    Hi

    Maybe i am being over picky doing my due dilligence?

    Thanks :)

    Can you be over picky with your due diligence.. If you think something stinks it probably does..

    Better to walk away than buy something where your not satisfied

    Hope whatever you decide it works out

    #1108491
    Shakin77
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    Hi everyone.

    Didn’t want to start a new thread and having read the introduction thread I thought I might as well post here.

    I have been talking to an agent about a Cafe I am interested in purchasing. However like the OP every attempt I make at getting information is stonewalled.

    I have asked for a Section 52, however the agent has told me as the premise is licensed they are not required to do so. Is this right? Seems strange.

    #1108492
    AgentMail
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    Bottom line is you should not buy a business unless you feel 100% comfortable with what you are actually getting. A simple assets list should be very simple to provide, and whether or not they are ‘required’ to do it does not change the fact that if they are wanting to sell the business, they will do it. Stand firm.

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