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I'm looking to buy an on;ine business but I'm finding that most sellers are not realistic and won't hold paper

I am interested in buying a proven e-commerce business and the price point of the business is not the issue. The issue is finding a seller who is both motivated, realistic and willing to hold paper on the business. If you truly have a viable business to sell then a performance buyout should not be an issue for any seller, period. This concept shows you have confidence in the business and the model it represents. Any interested sellers out there who are truly motivated to facilitate a sale? Thanks

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Answers (27)
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I can build, operate and transfer an online retail business in the US. I have products which can be sold on Amazon US marketplace. I have established a source for fulfilling the orders and the products are directly delivered to the customers.

I also have a method of adding new products to the inventory which will further give you a growth year on year.

This business model can be replicated to other markets such as UK, Spain, France, Italy, Germany,Canada, China and Japan.

I can manage this business on a partnership basis since I have experience operating successful stores on Amazon in the past.

We can share the profits as they generate so there is minimum risk involved.

All that is required from the partner is

-a registered trading company in the US with bank account and US tax ID number,
-a small credit line to operate the business.

An NDA and a MOU can be signed to get started.

Please feel free to contact me on galaxystores@outlook.com

May 31, 2014
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Advanced Merchant Group
Senior Sales
Bucks County, PA

Hi Dave,

I can help you when you do find that site and company out there. My company offers all Merchant services that will SAVE you alot of money! Please contact me as i will explain all of our features!

Good luck,

Andy Zettler
zettler2009@gmail.com

May 10, 2011
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Hutson Enterprises
Online Resaler
TN

I have the best online business opportunity in the world 9.2 billion in sales last year - anyone feel free to contact me at hutsondm@markerman.com

May 8, 2011
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Dave, I agree with you. If and when I sell I will almost surely have to hold paper. Financing is very tough nowadays especially for restaurants. The search continues..........

May 6, 2011
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MA

John,

Thanks for your comments. You clearly have the wrong the person to purchase your business, especially with a bad attitude towards it. A desire to own, operate, sacrifice, have a passion for the company and work long hours if necessary, are critical characteristics for a buyer/seller finance situation to work effectively. This also means finding someone who truly wants to work hard to make money and will do the work necessary to achieve this. Not always easy to find this type of person, just as it's not always easy to find a business owner to sell at a realistic, reasonable price and stand behind the numbers they are representing on paper. Both buyer and seller, in this situation need to have a certain comfort level with one another and both have to be willing to show each other a certain amount of trust, faith and good will towards each other. Again, not easy to always find these types of people and personalities that will mix well together. Having an open mind is essential for anyone to make a deal this way.

I still believe owner financing is very viable, but it's difficult finding the right situation for this to occur. In my opinion a seller can structure a deal with a down payment that is non-refundable should the buyer not be capable of fulfilling their ability to pay off the business in a specified time frame. It's sort of like option money that's put towards the purchase price and allows the buyer to opt out after an agreed period of time and the seller would retain the business and the option money that was put down. I feel the buyer should be able to walk away from the transaction, if the business is not what the Seller has represented it was to the buyer on paper. The Seller on the other hand, can also option out after the option period has expired if the buyer has not performed up to what was initially agreed to upon when signing the contract. You see, this method keeps both seller and buyer protected to a degree and also provides both some peace of mind that it's less likely either person will be taken advantage of. An owner can easily protect themselves as contracts can written in such a way to allow this. Parameters as to how the business will be run until it is completely paid off are an essential part of the contract. This means that the seller of the business still has input as to how the business operates until the final payment has been made. The buyer should be held to certain standards of performance and accountable hours of working the business as well.

The Sellers motivation to sell the business is another key factor as to whether a seller finance scenario will be possible. Anyone who has been trying for an extended period of time to sell and has not sold will be a more likely candidate for a seller financing situation. Also, if the business has been on the market for a considerable length of time and has not sold, it tells me as a buyer, that it is most likely overpriced and the seller is too stubborn and unreasonable to understand this. It's very similar to what occurs in the real estate market. If the home is not priced properly it will not receive any offers or even attract enough attention until it is. Many times sellers are too stubborn to understand this concept because in their mind they have a "castle" and it's the best of the best, when in reality they are asking way too much because of their own inflated ideas about what they own and that they deserve top dollar or they are not selling to anyone. Someone who thinks this way will most likely not be selling what they own anytime soon. It's truly amazing, I see it all the time.

Anyway, I hope you find the right person to buy your restaurant. There are very capable and motivated buyers out there who want to structure a deal.

May 6, 2011
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Dave, this is a true thing that just happened to me. We tried to make a deal with a long term employee that involved a lot of owner financing. Anyway, yesterday she was being miserable at work and actually told us that the customers make her stomach sick and that she is sick and tired of seeing the same people everyday, over and over. We have a restaurant btw, which is different from your industry, but it is an example of what kind of risk is involved with seller financing. With that attitude we have NO confidence that we will get our money back and not only that, we would get the lease thrown back at us because the landlord would never have taken us off the lease because of our great payment history.
Needless to say, i wouldn't finance her a pack of gum at this point and am thankful that the episode happened yesterday and not 2 months from now when it would have been too late.

May 6, 2011
Satish Patel
Sunbelt Business Advisors
Middlesex County, MA
Premium Broker

Hi Dave,
You might find what you are looking for in our database of more than 10k listings.
We are a leading brokerage firm in the New England region and can assist you in finding the right business.
Search through our listings at http://www.sunbeltne.com/buy-sell-business/business-for-sell/advanced-business-search.aspx or register with us at: http://www.sunbeltne.com/register-buyer.aspx for our business broker to assist you one-to-one.

Mark S., mark@sunbeltne.net

Jan 23, 2011
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MA

John,

Thanks for your feedback. You don't have to agree with my ideas, as logical and sensible as they are to me. I don't expect everyone would agree with my business ideas. That would be very presumptuous and unreasonable for me to expect of people. To each his own, right? You sound like an honest straight forward guy and that's not easy to find these days...people with integrity. Yes, there are a lot of shady characters out there that I have encountered, so the guard is up at all times.

Maybe the scenario I'm seeking is very rare or simply does not exist? I would have to define it as being similar to putting down a large down payment and then renting to own. Or in other words, leasing with an option to buy, where you put up option money as down payment and lease the business for a length of time to see if it's what was represented and then proceed with a structured buyout. It would be comparable to a test drive for both buyer and seller, if you know what I mean. I have to believe there are transactions that have and do occur in this manner. The question is, is this an uncommon method or unreasonable way to purchase? To me it makes perfect logical sense, but apparently from what I'm hearing in this particular forum, most Sellers want to take the money and run and don't want to structure an earn out over a short period of time. I see it as sort of an annuity payment for the Seller, though. They don't get the whole lump sum right away, but through the earn out period they would receive scheduled payments based upon profits. This method also determines fair market value for the business and the ultimate selling price since the scheduled payments would be based upon a percentage of the profits. There's no smoke and mirrors using multiples as a formula that most brokers like to use and these multiples they come up with can be very inflated and pulled from thin air. Using multiples to define value can be very subjective.

I do know of businesses changing hands using the method I've described and the seller does remain in the picture to some degree to insure that his business does not get run into the ground and that he's receiving agreed upon payments. I will keep looking and pressing forward and I appreciate your point of view.

Jan 21, 2011
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Dave, I have read every word that you have written, I just don't agree with a lot of what you are writing--- no offense just an owner's take on earn outs and partnerships. If you gave me 75 percent down I would finance you -- no problem. If you come to me with 10k and proceed to lecture me on why I should give you a 250k biz on basically trust alone then I will show you the door.
If it is an online business, most or all of the numbers should be verifiable. If the numbers are verifiable why should an owner take a huge risk on you?
Maybe I am stupid, I don't get it. I really don't know why someone would give away their biz to someone they don't know and trust them to keep the biz going. If you find somebody to do it God bless you, but since you haven't found anybody to do this maybe you should get some more money down. It is weird though, businesses should have SOME way of proving numbers-- the "proof is in the pudding" and I found the pudding, Did you try asking the owner for a period where you can physically watch the money? If somebody wanted to buy my restaurant I would allow them to work in it for a few weeks to see the money for themselves. maybe you are dealing with shady people? I do know a TON of the listings here are misleading (ok flat ouit lies) and hide behind the old "pro forma" bs.
To answer your question:
"Do you expect a Buyer to just plunk down a large chuck of money, possibly their life savings on a business and allow the Seller to just "move on" as you say?"
My answer is yes. That is what I did....250k btw. That is the way I feel. Once again if you give me 75 % I would finance the rest under most scenarios or (even just take a 'minor" percentage for a LONG time) and even start you with money in the accounts to help.
You still haven't given us details on the structure of your deal and what you are putting down.
I always tell aspiring business owners that the American Dream is out there..... but it isn't free and it isn't easy.
Good luck to you (I honestly wish you luck, no BS.)

Jan 21, 2011
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The BAF Group LLC
MD

How many deals have you done, Dave?

Jan 21, 2011
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MA

Don and John,

Unfortunately both of you are only reading parts of what I've written and what you want to hear.

Don, since you are a broker looking for a commission and primarily represent the selling side of most transactions, you will continue to have tunnel vision and be unable to think creatively.

You pose the question " Why should a Seller hold a note for a large portion of the purchase price, particularly for you, an unknown?" Well, Don in case you forgot, the Seller is an unknown quantity to me, as well. Researching a business using the data provided by the Seller is all fine and dandy, however, just having the financial data on a business doesn't necessarily mean that it is legitimate. Sellers lie and fudge numbers all the time. What utopic world do you live in? Also, you as broker are not liable for any of the information the Seller represents about his/her business. Again, your interest is simply to collect your commission and you don't give rat's **s what the Seller represents about the business. This is a major flaw in the business brokerage system. Maybe if you were "on the hook" as a listing agent, for what your Seller is representing then it would provide a greater level of confidence for a perspective Buyer. You see Don, everyone in the transaction is seeking some level of trust and confidence. You fail to understand this concept and that the Buyer is undertaking a massive risk of his own, with a down payment on representations from a Seller whom he dosen't personally know either... despite whatever numbers may be on paper. On paper the business may look like a goldmine, but the real proof is in the pudding Donny boy. An earn out scenario quite simply provides this proof.

Do you expect a Buyer to just plunk down a large chuck of money, possibly their life savings on a business and allow the Seller to just "move on" as you say? If what the Seller represents is for real, and it is proven to be viable over a reasonable period of time, then an "earn out" scenario is not unreasonable at all. It shows the Buyer, that the Seller has complete faith and confidence the in business and business model. It provides a greater level of confidence and trust for the Buyer, given that the Seller will continue to have a vested interest in the continued success of the company throughout the transition of ownership. The Seller is getting the security of a substantial down payment as well.

So again, it seems that all involved are seeking trust and confidence as to who is who and what is being represented and it can be achieved using this buyout method. Of course, in this scenario the the Seller would have to continue to maintain a certain level of control over how the business is operating. That is so obvious. Contracts can be written to hold the Buyer to certain level of performance during the buy out period as well. Contracts can be written thousands of ways to draft a deal...just think creatively and with an open mind... that's all.

So to infer that a Buyer will just plunk down a sizable down payment, come in and basically sit on his **s and run the business into the ground with his own investment at stake is quite foolish and yes, close minded thinking. It's more likely that the Buyer will be busting his **s to continue to make the business successful and to protect his own substantial investment or risk losing it. HELLO???? It's actually you who is myopic Don. You don't impress me with your 6 or 20 million dollar deals either. They are just numbers on paper, moving decimal points to the left or to the right. Sorry...can't pin a medal on your chest for that.

Jan 21, 2011
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Quote from Don:
"So, why should a Seller hold a note for a large portion of the price, particularly for you, an unknown? If it were that easy, he could sit in his vacation home and let one of his employees run it in his absence, just taking the earnings over time. The whole reason for him to sell, is to allow him to move on. And that takes money. He doesn't have the money to move on, if the majority of his funds are tied up in your note."
Yes. Ding Ding Ding!!!!! That sums up the way I feel.
Also to add if I held a note I would want a higher price (like full asking price) where as if someone had cold hard cash i would discount it greatly.
Also be careful what you ask for--- the seller might want a say in how you run YOUR biz if they hold a note. Nothing worse than buying a biz and having someone else tell you what to do. That is why the thought of having a partner or an investor makes me sick to my stomach.

Jan 20, 2011
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The BAF Group LLC
MD

As a matter of fact, I represent a lot of Buyers. Some of them are large corporations. I am negotiating on two Buyer representation deals right now. One is a $6 million deal and the other is a $20 million transaction. Both involve the Seller taking a note. In fact, many Sellers will take paper, once they have a bona fide, experienced Buyer. If you read my original text again, I said that: "Most service businesses require the Seller to hold a note." You have to read the words, Dave. All of the words, not just the ones you want to complain about.

So, why should a Seller hold a note for a large portion of the price, particularly for you, an unknown? If it were that easy, he could sit in his vacation home and let one of his employees run it in his absence, just taking the earnings over time. The whole reason for him to sell, is to allow him to move on. And that takes money. He doesn't have the money to move on, if the majority of his funds are tied up in your note.

Yes, the Buyer takes a large risk. No question. But you ignored my entire thesis, which is that the Buyer has the ability to research the deal, from a business perspective. There is a lot of financial data available, history, you can examine his market and clients, you can talk to his suppliers...what can he really examine from you? Empirically, not much! I guess he could get work references; but the vast majority of employers refuse to give out anything - good, bad or otherwise - because of the law suits that have arisen from such references in the past several decades.

Job history? Yes, you can at least track that. I am doing some consulting right now, and reviewing resumes of the current staff. One guy has been a "Sales Manager" here, a "Regional Manager" there, and a "Branch Manager" in another place. On paper, he looks like he walks on water. But he can't seem to be able to pick up a phone and get an appointment with a sales prospect, based on a lead that was given to him on a silver platter! On paper, he looks like a great guy to sell a business to.

The Seller could get personal references; but how reliable are those? If you had a personal problem with one of your friends, would you really put that in writing to the Seller?

It is you who is myopic, Dave. If you again read what I wrote, you will see that I tried to show why the Sellers do not wish to take a note. But I began the whole dissertation by saying, "Most service businesses require the Seller to hold a note." And I ended by saying, "It is always requires a win-win situation, Dave." And I stand by my assertion that their confidence in the business is not the issue. YOU are the issue. He knows what his business is all about, but he knows nothing about you. And your response is that he should research you? What does he gain from taking a risk on you? He does not research you: YOU make a presentation to him! You want him to take a risk on you and you are telling him what his responsibilities are?

And what do you say about the a guy that started the business from scratch: Who took a personal note on that risk? What records did he have to work from, when deciding whether the entire idea would work, at all? If it is so easy, why to 80% or so of all start-up businesses fail within the first 18 months?

I have a successful business, Dave. More than 70% of my new business comes from referrals from satisfied Buyers and Sellers. So, when you tell me how to run my business, when you insult my business practices, let's keep all of that in mind. It would be a good idea to know that you have some idea - ANY idea of what you are taking about. When you get a business, then perhaps you can give advice, too.

Jan 20, 2011
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Dave,
as an owner I can tell you that holding paper scares the crap out of me. I know how hard I have worked and how many obstacles I have overcome in making that biz what is today. In other words, I have confidence in my business but how can I trust someone that I dont know from Adam that they REALLY have the work ethic to continue my biz. Is this guy going to come in and do 6 hours prep work on Christmas to get caught up or simply run out of stuff the next day because he feels he shouldn't work on Christmas. If the landlord puts in a direct compettitor in the same shopping center as me will they just shut down because it isn't their money or will they fight tooth and nail to survive and thrive?
I do have some issues with your statements---not to start an argument at all, just presenting an owners side-- it seems that you are expecting an owner to do what you want but the problem is, it is MY place and I can do what I want. If I don't want to hold paper, it's my right.
I asked in a previous post what you are bringing to the table and you haven't told us (you don't have to,) so nobody knows if you are really being resonable or are you just dreaming.
Honestly, I would hold paper if I had 75 percent down for someone who I wasn't that sure of, 50% for someone who I din't know of but had great credentials in the industry. I would do 25% for a familiy member or a VERY close associate.
See, I have kids to feed and have bills to pay. It would be hard for me to trustt someone that they will have the same passion for the business if it isn't their money that they are playing with. I also think YOU should be more open minded and look at it from a sellers perspective instead of asking them to do things they don't want to do and then preach that THEY are closed minded.

Jan 20, 2011
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MA

Don,

Parts of your answer are absolutely narrow minded and laughable. You obviously represent only Sellers and as a broker you should be looking at any deal from both perspectives in order to have a "meeting of the minds" and ultimately draft a deal.
To say that it's "pure garbage" for a Seller of a business to have confidence in their business and their business model is a foolish comment and sounds completely ignorant. For a Seller to have and show confidence and good faith in their business and business model is of paramount importance when it comes to selling it. You are correct that I must due my homework on the business, but any seller should be able to show a certain level of confidence in the business they have built, enough so that they are readily willing to hold paper on the company. This action displays trust and good faith to any buyer and instills a certain level of confidence in what the Seller is representing and ultimately selling to the buyer. The Seller must do his/her homework on the buyer as well. Ultimately, both Buyer and Seller must be comfortable enough with what each is representing to take a mutually agreable, educated risk on each other. So you are correct that the Seller is taking some risk when holding paper with a Buyer, but you fail to recognize that the Buyer is putting down a substantial down payment on a business and thereby taking a substantial finacial risk of his own. HELLO???? Therefore, the risk component is a factor for both the buyer and the seller, not just for the seller. Maybe if you start putting yourself in the mindset of a buyer you could educate your sellers ( the ones who are sensible and motivated to sell) about structuring more creative and open minded ways to sell their businesses. I know this is obviously a foreign concept to you Don. Just try to wake up the other brain cells in your head before you offer you opinion next time.

Jan 20, 2011
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Would you be interesteed in investing $250K in exchange for 15% equity ownership in a smart phone/Internet emerging technology application in a $150 Billion marketing/advertising market? jorgemaass@gmail.com

Nov 17, 2010
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IC Tool Suite
Sarasota County, FL

Hi Dave,

Most sellers don't want to hold the paper. You would be much stronger if you walked in and were already funded then work with the seller to carry some paper. Sellers want cash buyers or worst case a credit worthy buyer. I can help you out in the process.

John Briches

Nov 16, 2010
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The BAF Group LLC
MD

Most service businesses require the Seller to hold a note. Part of a note; not ALL of the debt. And even this is not always the case, however. Whether they have confidence in the business, is not the issue. That is pure garbage. That is YOUR call, not theirs. You need to know enough about the business concept to make an intelligent decision of whether the business will hold up, over time.

In e-commerce, a big issue is whether the company in question has legs, for the future. The majority of such companies have very short life spans, regardless of whether a sale is involved or not. Ease of entrance into the business usually means that there are huge amounts of growing competition. So, you should look at the last three years of Revenue; it if is declining, you have a big decision to make: Is it because of the ecomony; is it poor management decisions; or is it the increase in competition?

The Seller may have all the cofidence in the World, in his business concept; but why should he have confidence in you? From their perspective, who is to say that you won't take a great business and run it right into the ground? Saying things like, "If you truly have a viable business to sell then a performance buyout should not be an issue for any seller, period," is arrogant. And completely untrue.

You have all of their Tax records and other information about their company, but what have you given them to take to the bank? Just what are you offering them, in exchange for the incredible risk, work and money that someone might have put into starting and building a business?

It is always requires a win-win situation, Dave. Your black-and-white analysis makes you sound like this is a foreign concept, to you.

Nov 14, 2010
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MA

Thanks for the advice Allan. I''m actually hoping to find a deal that would include a three year buyout. I think that's reasonable. But convincing a seller that its reasonable is another story. Many businesses are bought and sold this way in a leveraged buyout scenario and sellers should be more open minded and creative when it comes to structuring a deal, especially in this economy. If they're not open minded, then they are simply not motivated to sell and they will continue owning what they are hoping to sell. This is the concept I'm trying to convey to the seller. As for some of the other comments out there, I'm risking money too with a down payment, so I definitely have something to loose if the business is not what was represented or if the business all the sudden looses traction and heads south. If the seller truly has a viable business and business model, they should have complete confidence in the business that they are selling that it will continue to prosper long enough to hold paper on it.

Nov 14, 2010
Allan Mooney
InternetCompaniesForSale.com
Managing Director
Hennepin County, MN

Hi Dave,

As someone who has many years of experience in dealing with unrealistic sellers AND buyers, I can relate to what you are saying. On the other hand, depending on your knowledge of the specific business you purchase, you might not have everything in place to continue to be as profitable as the previous owner. Most deals Ive put together that involved holding paper, do not exceed three years AFTER the purchase of the business and official closing. My personal advice would be to perform your due diligence, ask the seller directly how s/he would continue to run the business so it stays healthy. Also, I personally wold recommend either a Yahoo! Store or purchasing an Amazon store. They provide you with all the sales records, traffic, buying habits etc...

Hope this helps.

Nov 14, 2010
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Ok but what is the buyer bringing to the table? Are we talking he has 75% down or are we talking he has 10% down wuth crappy credit and no experience? He doesn't write in his post what he has to offer. A perfomance buyout SHOULD be an issue for a seller PERIOD. Why would I give up my life's work for someone who I don't know at all and have a chance that he my ruin my biz and not care because it was my money he was playing with.
I am not saying this guy is bad or anything like that at all but like buy a company said show us what you have been trying to do and then we can tell if what you are doing is feasible.

Nov 14, 2010
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Stick to you guns on requiring the seller to hold some paper. even if your offer as "almost all cash" hold beck money to cover undisclosed liabilities and to assure that the seller does not violate any 'non-compete" agreement-a good recent book on this subject is "How To Buy a Business Without Being Had"

Nov 14, 2010
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As an owner, I might do some financing but not much unless I knew the party very well (relative or someone who worked under me). No way would I do an earnout. The problem with what you are proposing is that it would be WAY too easy for you to walk away and leave the owner holding the bag (and a now worthless company.) It would depend on how much you had down also if I would finance. If I sold my place I would immediatley leave to live on the beach so I would need a lot of moolah for the move.
I do agree that some owners aren't realistic--- you know, a restaurant for 300k that has been closed for a year but has lots of "potential." Etc, ad naseum.
On a side note..... there is a listing on here near the Gulf that says "don't ask me how much the place will make you, ask the man in the mirror." Potential, blah blah blah, potential.......If the place isn't making any money then it is worth FFE (used prices of course)and if you are lucky I will take over the lease and bail your sorry butt out of the situation you got yourself in.
Sorry, rant over.

Nov 12, 2010
Buy-a- Company

anyway... Dave, post the figures for the deals that were unsuccessful, so we can analyze.

Nov 12, 2010
Buy-a- Company

tried again to post... What's up this AM?

Nov 12, 2010
Buy-a- Company

just posted lengthy response, but it did not show up.

Nov 12, 2010
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contact me on my profile.

Nov 11, 2010

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