17 Mar Business Buyers Save Big Money with Buy Biz USA’s Business Buyer Advocacy Program!
Sellers say “Many thanks….Now we are even happier that we got to know [Legacy Venture Group / Buy Biz USA]…other wise we might have ended up buying [name blocked] and would be in trouble now.”
Clients from Texas read about a “great restaurant earning well over $135,000 available in Tampa Bay”.
As is often the case, it was a confidential business being marketed for sale. The Seller had contracted with one of Tampa Bay’s older business brokers to find a buyer for his successful restaurant. Like so many restaurants, gas stations, and other businesses, the owner’s financial records were to be kept “Highly Confidential”.
The Broker was would only share that the restaurant was allegedly netting around $135,000 to the owner, but the details of the financials, such as the gross sales, the business expenses, like labor, food cost, electricity, the profit & loss statements, and of course, the taxes, were all withheld until the prospective Buyer sent the Broker $10,000, even after the Buyers had signed and returned a confidentiality form. The broker stated simply that all they needed to do was to send a $10,000 check in escrow to show the owner that the Buyers really were serious about learning more about this business.
The Buyers followed up with Legacy Venture Group on their Business Buyer Advocacy Program. They inquired as to whether our firm might be able to help them understand that process a little bit better. They understood that maybe the final taxes would not be revealed until after putting a deposit down, or even after making an offer acceptable offer on the business, but they were concerned as to why neither the Seller, nor the Broker, refused to show a detailed breakdown of the last few years profit and loss statements to help them feel more confident about their significant investment of hundreds of thousands of dollars.
Furthermore, they were putting a lot of trust in the relationship since they were so far away. If the Business turned out not to not be earning what the Seller claimed, what would the terms be to release the Escrow funds? How quickly could they get their money back? Did they face any risk in the process?
Feeling uncomfortable to process and not willing to send over $10,000 to escrow account before having more information they waited out the decision and looked at other possibilities. Just recently been very successful rest restaurant closed it’s doors and disappeared.
There are lots of reasons people might close down highly profitable businesses. People get sick, needs change, life events change things for people – there are many legitimate reasons. But still, the Buyers thought it seemed to be odd that they could not show at least a little bit of evidence to how all those profits before about of such a restaurant.
We don’t really know the details. Maybe the Seller had serious family issues will possibly some health issues. We hope not. But still seems odd that nobody would buy the business that was doing so well and strange that no representation of the figures could be revealed without sending the Broker $10,000.
Always be cautious. Usually the best businesses will share a reasonable about of information regarding their earnings. Additionally, it is important to compare business earnings by using the same formula for determining Owner Benefit or Seller’s Discretionary Earning (SDE) or EBITDA for larger businesses. For more on how to calculate Owner Benefit, please request our Article on SDE. You may review articles on the website or email your request for the formula at INFO@BuyBizUSA.com.