Business been for sale for a long time! Please look.

[Jason_Lee]

Hi all.

About 6 months ago i was very interested in buying a business that was for sale. I do not have the money now, but it is still for sale. Please could you advise me on what i am about to ask?

Do you think it would be possible to aproach the owner with the intention of managing the shop, paying him a monthly fee for the business. When an agreed price is paid for the business over a set period of months i own the business.

Could something like this work as i feel i could make the business work in many areas. How would i aproach the owner?

Please, any input guys?

[Hedgehog Toys]

Hi,

I personally would agrre to that idea if i had the business up for sale for a long time and had no interested parties but i guess it would be down the individual.

If the price is the same at the end of the day i can't see a problem...go for it...if you don't ask..you don't get :D

[uksbc]

.if you don't ask..you don't get

good point. what are you going to lose by asking the question.

worst case is they will say no

[Jason_Lee]

Thanks for your advice guys.

Is there anything i should take into consideration legally? Say if the business was not as profitable as they said it was then after 2 months if im losing out i would want to be able to pull the plug.

I mean there are quite a few people out there now that make a business sound better than it is to get a quick sale.

What do you think?

[JustOneUK]

that is a risk buying any business. Obviously you would need to do your homework first, look at the books and all available information, sales etc, or get an accountant to do that for you, and find out why the business is being sold, why there are no offers, blah blah.
you would need to do that regardless of whether you were buying outright, or in installments.

[Jason_Lee]

Yeh i agree.

I bought a business before and the books i looked at were simple. I dunno if they were right?

They had sales for that year, expenditure that year, and what the expenditure was on that year. Should the books have a breakdown on individual sales or just monthly etc.

Basically what should the books consist of?

[bwglaw]

Jason, it would be up to you to make enquiries as to the viability of the business and whether it is a genuine going concern.

By offering to pay the purchase price in installments does cloud the legal ownership and runs the risk of the intended purchaser, you, to abscond in the event of discovering discrepancies in the sale, the accounts or any aspects of the business that may take you by surprise.

If I was a business owner selling a business I would not accept the arrangement because for instance, who would be the 'employer, who would be liable for rates?, etc.

The other way round it would be for you both to form a partnership and then in that partnership you come to an agreement to dissolve that partnership by the way of a sale of the business.

I fear that the vendor's solicitors will have a few words to say about the suggestion. The vendor may agree with you but only to reverse that agreement on the advice of his/her solicitor.

If you were selling a house, would you allow a prospective buyer to pay you monthly? The same principle applies for a business.

I would advise that you get independent legal and financial advice. If you are prepared to pay monthly for the purchase, would you really feel secure this way?

[fastfences]

Hi Jason,
If you've bought a business before, you should have an extremely good idea of what to look for.

There are really only 3 things:
Outgoings
Ingoings
PROFIT

If there's no number 3 - no deal!
Cheers, Nigel

[bwglaw]

Ingoings?!...new to me...you mean incomings? If there is no number 2, no deal too!!

[Jason_Lee]

I understand this. What im saying is the business i bought before was profitable but the accounts were tampered with, there were more sales added than there actually were. It is a good business and i would have bought with the genuine figures.

Is it best to let a professional have a look?

[bwglaw]

Without a doubt...get an Accountant in to check the books. Did you not get an Accountant last time you bought a business?

Also check any assets and liabilities - you need to be certain what liabilities the business has.

What kind of business is it and would it be a Ltd Company?

[Jason_Lee]

It is a retail business and yes it is a Limited Company.

Last time i bought a business i did not use an accountant. This was a while ago now though.

Thanks alot for your advice so far!

[bwglaw]

If it is a Ltd Company then I suggest you buy/download the statutory accounts/return from Companies House and do a company credit check since you will be buying the liabilities of the Ltd Company, which amy well have a bad credit history.

Ask for references from suppliers, banks etc. It pays to get an Accountant on board. You should ask for a specification of what the price includes.

Our company can assist with the commercial issues and our Finance Director can inspect the books, obtain credit checks etc. I would be able to do a thorough legal check on the company.

Just PM me if you need further assistance

[Jayne]

Hi,

We sold our first shop that way, but it wasn't a problem for us having weekly instalments, as we had our big shop which was doing fine. We had a solicitor and he drew up agreements between us and the buyer. It was a right hassle and I wouldn't do it ever again. He was late with payments and I had to keep phoning and asking for them etc. We got all our money in the end, but what a headache.

We knew the lad who wanted the shop and felt sorry for him, he couldn't get a bank loan. He went from being a nice lad, to a monster and tried to pinch our orders. We even sent our staff down when he first opened to help him out and we paid the wages. I'd never trust people like that again.

Jayne :D

[crus]

Jaynes post confirmed it for me,

paying monthly looks messy. What if you make the business a sudden success? Or what if it fails and you still have fto fork out cash before you own and can release assets to cover the debt?

I would get the money from elsewhere and offer a low low price if the business has not sold but been for sale for a long time.

There will be a reason why it hasnt sold, what is it?

D