What is the extent of the Buyers obligation to investigate a business before purchasing it? To what extent should a Buyer rely on the Selling Broker for "decision making" information? A "Common Sense" approach to buying a business should tell you that certain areas need to be investigated before completing any business acquisition. So why is it that so many people find out so much about the business they purchased after the closing of the escrow?
The Buyers diligence begins upon the early stages of developing the idea to begin a business. The Buyer needs to start by thinking out how deep his or her commitment to the business will be. Is the Business Model conducive to your life style? It is extremely important to be realistic, fully aware and prepared for the commitment of a new business. Regardless, if the business is easy to operate, like a Coin Laundry or more complex and time consuming, like a restaurant. An acquisition of a business requires independent thinking and a willingness to seek expert help and guidance, when lacking. While Business Ownership offers a sense of freedom like nothing else can, without proper preparation this dream can turn into a nightmare; and always, unnecessarily.
As for the purchasing of the business; does the Buyer possess the skills necessary to assess and evaluate the business? Doe he or she have a good understanding of the potential of the market place, knowledge of the age, efficiency, current nature of, and condition of equipment and fixtures, marketability of the inventory and, of course the lease terms are critical to understand.. These are big questions and require investigation; along with the more obvious, books, taxes and receipts. Does the Buyer have a clear picture of the improvements that need to be made to advance the business? No one wants to buy a business that can't be improved. Typically, a new owner will want to make improvements. So, an understanding of the improvements that need to be made, along with a realistic estimate of their costs and the anticipated Net Effect; in terms of the Return on Investment, for these improvements need to be understood long before the lifting of contingencies or earlier.
It has been my experience that most Buyers anticipate that the Sellers Broker is on their team. This might very well be true; but you should start with a clear understanding of the role of the Broker. The extent of the relationship between Buyer and Broker needs to be clarified up front. In many cases, where the Buyer is fully capable of assessing the business and these other areas, the Sellers Broker alone might be sufficient. But in many transactions the Sellers Agent, is just that. Your questions might be answered but not unless you formulate them for yourself, first.
The key is to make certain you are getting what you are paying for. The Buyer is entitled to Fair Dealing practices from the Sellers Broker, but often times needed areas are neglected. It is important to have qualified representation looking after your interests. In selecting a Broker, be certain that the Broker you choose to work with has specific knowledge of the business and industry you are purchasing and your personal goals. Be certain that what you paid for is what you get.
With so much at stake; why is it, that in so many transactions the Sellers agent is the only agent? It might be due to the Selling Brokers reluctance to share their commissions. This is compounded by the Buyers reluctance to pay out additional funds for a Broker or specialist/consultant. The additional fee might seem unnecessary. To just complete a transaction, so, many Buyers rely on the Sellers Agent for assistance. This can create a misunderstanding; unless properly clarified at the beginning of the relationship.
I have personally acted as a Dual Agent in the majority of my own transactions. I believe that honest and experienced Brokers can deal in this role effectively; but, it must be understood early on. The Seller should also be aware of the Buyer/Broker relationship and understand its implications. It is additionally important that the Broker clarify the limits of the relationship and his obligation to the Buyer at the onset of the negotiations.
But once you have taken possession you are left on your own to discover the issues that were not brought into the conversation during the transaction. So start out right. You need and deserve individual attention. Be sure you get it!
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Steve Erlinger: Laundry Broker, Consultant - Southern California
I specialize in the laundry industry broker and consultant in Southern California. I assist buyers navigate the many facets of finding, evaluating, and operating a laundry business. I also help current laundry owners find additional stores, sell, evaluate an existing laundromat. Call 949-500-5893.
|Mike Hurrell, Broker: Laundry Specialist - Southern California
Providencia Properties Inc in association with Golden State Laundry Systems is a full service Coin Laundry Real Estate Broker. At GSLS you will receive personalized attention from our professional staff of coin laundry experts. To sell or buy a Southern CA laundromat call Mike at 310-223-2240 X209.
|Peter Siegel MBA, BizBen Founder, ProBuy, ProSell, ProIntermediary Programs
Founder Of BizBen.com (since 1994). I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I consult daily with buyers, sellers, and brokers daily about buying and selling California small to mid-sized businesses. Call 925-785-3118.
|Chuck Post: Laundry Buyer Representation, Consulting, Due Diligence
32 years experience in the laundry industry, specializing in assisting laundry buyers with buying or starting up, re-tooling, laundries in Southern CA. Laundry buyer representation, consulting, due-diligence, lease negotiations, laundry valuations. Call 619-227-5711 (Cell).
|Larry Larsen: Laundry Consulting, Brokerage, Insurance
I have over forty years of experience in the sales, ownership, management, and construction of coin laundries. He is a licensed broker active in the sale of coin laundries, a licensed insurance agent specializing in coin laundry insurance. Phone me at 714-630-9274 or 714-630-Wash.
|Randall Barondess CBB, Business Brokerage Services - Central Coast
Experts at: Preparing Businesses For Sale, No-Cost Valuations and Lease Modifications. MaxOne Business, a REMAX ONE Company prepares small, mid-sized and large businesses for sale by confidentially packaging the business and providing guidance throughout the sales process.
|Brad Steinberg, Business Broker: Laundromat Specialist
PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.
|Peter Siegel, MBA: Business Purchase Financing Solutions
Niche business purchase financing advisory and loan placement services with SBA and Non-SBA Financing, Retirement Fund Rollover Solutions, Combo Financing Packages. To get professionally pre-qualified or more information on the ProBuy/ProSell Programs: 925-785-3118.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|When Buying A Laundry Why Buyers Should Have An Exit Strategy When Buying
Chuck Post (reach him at 619-227-5711) a laundry consultant, specialty broker, buyer representative & due diligence advisor starts this discussion on why it's important to have an exit strategy in mind while buying a laundromat! He & others explain why this concept is so important to serious buyers.
|Selling A Laundromat? Top Tips: Valuation, Pricing, Finding Buyers, Resouces
Laundrys are popular choices among business buyers as they often can be successfully run as an absentee run business. You need to be strategic about when you sell your Laundromat so you don't get taken to the cleaners! Peter Siegel, MBA (at BizBen) provides laundry purchase financing - 925-785-3118.
|Laundromats: Are They Good Investments For Business Buyers? We Discuss This.
Are laundries good investments for buyers? Chuck Post, (at 619-227-5711 - California laundry consultant, due diligence services, and laundry buyer representation) discusses this topic with other advisors & brokers in this BizBen Discussion about laundry investments and if they are good investments.
|Laundromat Business Valuations: Could Buyers Of Laundries Be Overpaying?
Chuck Post (laundry buyer rep, consultant, due-diligence expert) discusses the factors of appraising laundries. Why such high purchase prices is baffling - many times the value is so misunderstood that it results in laundry buyers over-paying for a laundromat. Reach Chuck direct at 619-227-5711.
|Laundry Broker Explains Laundry Leases: 4 Big Issues For Buyers And Sellers
Chuck Post (Laundry Buyer Rep, Consultant, Due Diligence) discusses what laundry buyers and sellers should consider when reviewing and considering a laundromat lease. A must read for potential laundry buyers and owner/sellers of card and coin operated laundromats. Reach Chuck at 619-227-5711.
|Laundry Expert Reviews: The Laundry Lease And Its Effect On The Valuation
Read why longer leases increase the value of a card or coin laundromat when buying or selling a laundry. Chuck Post (Laundry Broker, Consultant at 619-227-5711) expands on the topic of lease structures on the purchase or selling of a laundromat. Laundry sellers and buyers will want to read this.
|FREE Live Laundry Seminars For Buyers: See Our Upcoming Schedule Of Seminars
Looking to buy or start up a card or coin laundromat? PWS Laundry is presenting their schedule of upcoming Seminars for laundry buyers & entrepreneurs. These informative live Seminars will cover an overview of the laundry industry, selecting the right location, an overview of leases, Q&A, plus more.
|Interview: With Chuck Post On How To Buy A Laundry Business Successfully
Chuck Post (and his Associate Chris Mason) a California laundry consultant, due diligence specialist, buyer representative for laundry buyers shares his thoughts with Peter Siegel, MBA on this BizBen Podcast & Webinar. Chuck and Chris cover all related topics on buying a California laundromat.