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My latest encounter with a broker. Unbelievable!

In my never ending quest to find a business on the beach, I talked to a broker about a busness that the listng read, "PROFITABLE." Without going into great detail. I asked three times what the cash flow was. The first two times she ignored my request. The third time her response was that she did not do "projections." Why would you even list a business if you didn't have a cash flow number? What kind of mentally defecient person would even look at a business where the broker wouldn't even tell you what the ownership benefit was??

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In my scenario; If John or anyone else were interested in the "Beach-side Business" the next step would be for John to contact me and sign a NCND agreement and I would send over documentation (including P&L's) of the business which is for sale. He would in turn should have his advisors analyze and authenticate the documentation (if he were wise). I'm not really attempting to build any dramatic confidence here, just to pique interest to request further info?

John has not yet requested info on this great business - so I guess I did'nt pique interest either !(chuckle) Make it A Great Day, Guys! I enjoy this forum!

Nov 9, 2009
Jessica Hadler Baines
American Business Group, LLC
Orange County, FL

I'm a broker in Florida, and I know that brokerage custom does vary from state to state. Some brokers do not co-broker (show other broker's listings), whereas that is very much the custom in Florida. This enables a prospective purchaser to use an experienced broker that they know and trust who can show them any business listing, regardless of which office has the listing. Do you know if this custom exists in your state?

And I agree with Julie's statement. Patience. It can take 6-12 months, even longer, to find the right opportunity, especially considering this current market and that revenues for most businesses are currently down.

I'd be curious to hear how long this broker you dealt with has been in the business. Cash flow (reality) and projections are very different financials. I don't like to deal with projections with any business (existing or new) unless they are provided by the seller and contain detailed methodology.

Nov 9, 2009
Carl Pallini
Tri State Franchise Authority
Pike County, PA
Premium Broker

Just a sloppy non professional is the answer to your question regarding this broker.Your request fro a cash flow number is a basic question that needs to be addressed iummediately by the Broker.

Nov 9, 2009
Julie A. Barnes, CPA
Small Business Exchange, Inc.
Travis County, TX

Hey John,

I'm still trying to figure out what "projections" have to do with cash flow. I think it's pretty obvious that you're dealing with one of many 'business brokers' who shoot the rest of us in the foot (feet?). I don't know how long you've been looking for a business on the beach but I would definitely recommend patience - a LOT of it.

In answer to your last question - you're totally correct - only a cretin would purchase a business before performing due diligence. I agree with Don - let's see some reconciliations to tax returns or an audit.

For free advice about buying and selling a business, please visit

Good Luck and Thanks!
Julie A. Barnes
President, SBX, Inc.

Nov 9, 2009
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The BAF Group LLC

John, you are correct! There is no excuse for that. From your description, it sounds like the Broker was either completely negligent, ignorant, or - and this sounds the most logical, from your narrative - potentially fraudulent in her promotion of the business.

And Dan, I am uncertain I would offer information like "Dicretionary Cash Flow" to someone like John, with the simple disclaimer that the information was furnished by the Seller. How was this conveyed? In a verbal exchange, or through examination of Tax Returns? I think John is looking for something a bit more concrete, and while your statements certainly are more professional than the Broker about whome he was compaining, your comment provided less than a dramatic confidence builder. I am not suggesting you are doing anything wrong here; but in light of his difficulty, can you be more specific for him in suggesting the source of your profit information?

Nov 9, 2009
Jon Holmquist
Edgemaster Model 400 sharpener
Marion County, OR

Just one more reason to look at franchises with a reasonable franchisor.
You get all the facts by going to a franchisee direct.
Jon A. Holmquist at Edgemaster Mobile Sharpening

Nov 8, 2009
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John- I know of one of the BEST Beach Businesses in SO. CAL. This company has a good reputation and has been featured on ABC 7 (Los Angeles) news program as well. The owner believes a business with strong numbers like these at this price is very hard to come by these days, don't miss it. Annual Revenue: $800,000 FF&E: $45,000 (Included in the price) Inventory: $70,000 (Included in the price) Seller's Discretionary Cash Flow: $275,000 Asking Price: $380,000 Disclaimer: The information above was furnished by the seller.
Asking Price $380,000 Inventory $70,000*
Gross Income $800,000 Real Estate
Cash Flow $275,000 Year Established 2007
FF&E $45,000* Employees 5

For Good fortune in finding a Great Beach business - Contact :

Nov 8, 2009
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To clarify, this was an existing 4 year old business, not a start up.

Nov 8, 2009

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