Take-over/Buying a new business - what to do?
Other than the normal regular questions that you ask sellers/broker, financial statements, lease copy, etc., what else do you ask? ask yourself, and ask the seller?
The big/major gripe I have is the financial statements provided would never really show anything fully "truthful". And if you own a business, I assume that you know what I am talking about.
If a business is listed for $200k, i would expect some profits close to $80-100k (maybe before taxes). So 2 - 2.5 years would be a rough estimate for ROI. But financial statements would be somewhere in the low tens ($10,000-$15,000) or even at times, negatives. Obviously, no one wants to buy a losing business and think they'd bring it up, might as well start a new one. Or, no one would buy a business and wait 20 years to make back the investment. And I know the sellers would agree to this.
There has to be some hidden numbers that sellers can't show or won't show. How do I get them to show me these numbers? Or what other ways to see these numbers? And even when they do, how do I validate these numbers?