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How Long Should Business Brokers Hold On To Their Client And Deal Files?

Comments & Replies: 1     Views: 4757     Posted By: Joe Ranieri  Joe Ranieri, Business Broker: LA, Orange County Areas

As the year winds down, it's tempting for business brokers to go through their old files and throw them out to make room for new client's folders, but that would be foolish. Joe Ranieri (Orange County Business broker) discusses strategies for saving files - a key annual strategy for brokers/agents.

Topics: Business Brokerage, Deal Structures, Legal Issues, Selling A Business     Tags: business brokers, legal issues



As the year winds down, it's tempting for business brokers to go through their old files and throw them out to make room for new client's folders, but that would be foolish. In an increasingly litigious world, it's important that business brokers keep good records, and remember that even though a transaction may be closed, it could still one day be litigated. A broker should investigate their state's statute of limitations on fraud, misrepresentation, and other claims a buyer/seller may make. One should check with their own state, but often the statute of limitations begins, not at the close of escrow, but the time the alleged fraud is discovered.

I would suggest that a broker hold on to their contracts and disclosures a minimum of ten years if not indefinitely just to be on the safe side. If a broker gets called in to court after 3-4 years after a transaction has closed, and they can't provide disclosure forms the seller filled out, then they are going to be in a lot of trouble.

Not only are contracts and disclosure forms important to hold on to, but also pertinent email and text correspondence. Regarding email, I create a digital folder that I can archive all correspondence.

Let's face it, typically the same businesses sell over and over, regarding restaurants, every 2-3 years, and so keeping good records, allows a business broker to create a data base of those businesses and routinely prospect them, because many times past clients have no loyalty and will list with whose ever postcard they got last.

I would be curious to hear from others on this Discussion about how long they keep business records.


  Helpful Resources To Assist In Selling And Buying California Businesses
Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Shalonda Chappel-Pilgram: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

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.

Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.


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