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

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Comments & Replies: 1     Views: 4126     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.


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Helen Yoo: Escrow & Bulk Sale Services - Southern California

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Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services

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Joe Sandbank, Esq. - Legal Services

I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.

Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

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.

Elizabeth McGovern: Escrow Services - SF Bay Area

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Ranvir S. Sandhu, Esq. - Legal Services For Buyers And Sellers

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