The other day a guy contacted me and told me he was interested in buying a business that was far away from where he lives. And he was almost frantic about what to do as far how much information he should get from the seller before planning the four-hour flight and face-to-face visit.
Here's what I told him:
The main things youre looking for with an owner before getting on the plane are the same questions you would ask if he was just down the block:
1.) What is the price on it.
2.) What is the net profit.
And besides that, before you fly across the country, youre going to want to see the financials for the past three years...the balance sheets from different years so you can see what the assets look like...and how long the owner will stay with the company after the sale.
Now, you dont have to ask him for leases and inventory lists and all these other things because whats going to happen is you may get there and find out you dont have a deal or that you cant put it together. And so, if youve asked for too much information, youre just wasting your time and the other persons time, too.
Bottom line: Whether it's long distance or not, asking these questions up front is a must. You want to make sure the thing is going to work before you get there. If it does, your success is all but guaranteed as long as they're telling the truth. On the other hand, if you think the business is doing $2 million a year and its worth $8 million, and the guy wants $15 million, then you probably want to walk away and not bother.
Personally -- and I've been doing this for half a century and have seen it all -- I never go a long distance or drive a long distance to visit the business unless the price and the terms and the deal the owners offering is in the ballpark. |
