Recently I was talking with my friend (attorney) David Cook. We got on the subject of stupid things business buyers and seller do starting with a guy who is looking at a deal with so much hair on it I wrote him, “I can’t recommend you do this deal.” Of course, he’s doing it.
We went back and forth and here’s a few tidbits from that conversation.
- I did a consulting project for a small business. Later the client called me and said he sold the business, and the buyer wasn’t making payments. I asked about a promissory note, none. I asked about what his attorney did, didn’t use one. He sent over a two page buy-sell agreement they did themselves. Yikes!
- David shared about a buyer who allowed a standard commercial brokers association agreement to be used and paid the price (he obviously didn’t use David on this deal). The buyer also didn’t meet the key employee prior to the sale, said employee was miffed, left employment, and started competing. Obviously no non-solicitation agreement.
- A very sharp businessperson made his third acquisition and there are now disagreements regarding the working capital. He relied on his CPA who didn’t get the QuickBooks file, he just worked off statements. I told him the CPA should always get in the accounting system. Turns out there were some funky journal entries the year of the sale (not malicious) any accountant would have found.
You can’t make this stuff up. It shows the value of getting professional advice, which is not a cost but a benefit. Just ask those above.
“A wealth of information creates a poverty of attention.” (Economist) Herbert Simon
“Time is free, but it’s priceless.” Harvey MacKay
