The owner selling the business doesn't have recent financial information or documentation but insists revenues are increasing. Should buyers believe the seller? What should buyers do in this situation? ProIntermediaries on BizBen answer the question of verifying seller / owner's financial claims.
Comments & Feedback From Pro Intermediaries & Pro Advisors On BizBen:
This would mean that the seller is "flying blind" while running their business, which I highly doubt. Perhaps the seller has two sets of books of records, one for the government and another for themselves, because they under-report their income, but the fact they want to show nothing to the buyer is a red flag. A seasoned buyer may not even trust the seller, and would rather do their due diligence through visual observation, looking at 12 months of inventory receipts, etc., things that are harder to fudge, but a business broker is really playing with fire by representing a seller who refuses to give financial figures, and could later regret getting involved if both parties were to get involved in litigation for fraud or misrepresentation at a later date.