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How to buy a business

Hi, this is a rather simple question built out of a bit of frustration. I saw a coffee shop for sale that I was truly interested in and contacted the business broker who had the listing. I mentioned my interest, that I have financing (would have done all cash) and so on. I also mentioned that I need help evaluating this business. I got zero input other than it's a great business in a great location. What use is a business broker when that's the service I get. I had to do all of my own research to determine the questions to ask, and then he attempted to answer them, though most he did not have answers for.

So this may be quite an open ended question, but really how does one go about evaluating and buying a business?

K Larsen

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We are financial consultants to a group of investors whom we have their consent to manage their funds which is in our custody for cooperation in joint venture business investments.

Our areas of interest include Property Development and real estate, Health Care, Education and training, Mining and exploration, Energy, oil and gas,Technology, Software development, Agriculture, Manufacturing, Finance Services and Leisure.However, all viable proposals within reason will be considered.

Funds shall be made available to you as a direct investment loan at 3% interest rate per annual for a period of 2 or 30 years depending on what you prefer. You may contact us if you have interesting investment proposal for possible business collaboration for our study.

We look forward to your reply to enable us provide you with details or you may visit our website.

Kindly acknowledge receipt of email.

Thank you.

Yours Sincerely
Jesse Peterson
phone: (980) 239-7539
email: info@interventionmortgagefirm.com
web: http://www.interventionmortgagefirm.com/

Jul 4, 2017
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The BAF Group LLC
MD

I am not certain I would call it an "amateur mistake". Business Brokerage is an odd culture. As a Buyer, you would not normally use a Broker to run interference for you. When we act as Buyers' representatives, it is normally for larger, corporate Buyers. If it were a Real Estate Broker, Buyer's Agents are welcomed and the listing Broker would normally share commissions with such a Buyer's representative. In Business Brokerage, the vast majority of Brokers do not do that. And I personally believe that Brokers who do not cooperatve with Buyer's Agents make a big mistake and do a disservice to their Clients, who are their Sellers.

What I am saying is that, if you (as a Buyer) have a professional Accountant and Attorney to call on, you do not necessarily need your own Broker. You can begin the search process as you have, as long as your due diligence process is aided by these other counselors.

Good luck to you!

Nov 10, 2011
K Larsen
Albany County, NY

Ah, such a simple and amateur mistake, but your response makes a lot of sense. Given that I wasn't represented by my own business broker, I contacted the selling broker directly. I just assumed that brokering both sides is fairly common and wouldn't cause too much of a conflict. The business has since sold and I regret not making a strong run at it. I will be better prepared next time. Thank you for your response.

Nov 10, 2011
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The BAF Group LLC
MD

As a Broker, there are two sides to your question, in my view. First, I think it sounds - and I am only getting your side - that the Broker did a lousy job. If he did not have answers to your questions, he should have found them!

On the other hand, keep in mind that in this case, he was really representing the Seller - not you. This does not mean he has no obligation to tell you everything he knows about the business, or to get you the information you require that would allow you to make an intelligent decision. But in terms of helping you evaluate the business, that is not his job. Again, he needs to give you the information to allow you to evaluate it; but if he were to evaluate it, or help you in doing that, he could later experience a liability for leading you in an erroneous direction, for the sole purpose of lining his own pockets.

A Broker who represents the Seller should provide you with a wide array of financial information, and answer qualifying information that you can use to make up your mind. To fully evaluate the business, the first person for you to contact is an Accountant that you trust, and who is experienced in acquisitions. Next, you may want to talk to others who have been in the same business and bounce the information off of them, to see how their expereinces can provide further insights. (If you have signed a Non-Disclosure Agreement, you need to be extremely careful not to run afoul of that Agreement!) Then, an Attorney should be contacted to determine what legal issues might be involved with this kind of purchase, and what you need to do to prepare yourself for setting up your own company.

I hope this sheds some light on the problem; and I apologize that you had a difficult time with your attempted purchase.

Nov 8, 2011

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