Financing
Hi,
I am trying to acquire a convience store in my neighborhood, however I am doing it by buying a partnership. My concern is that the figures that I am recieving from the partners, well there just seems to be monies missing. Anyone have any advice about how to make this deal work out, without us losing our shirts
I have never done such a deal so that this as a comment from a related field...
When dealing with a multi-unit building or someone who is trying to show the historical track records for income and expense, I have asked for copies of the tax return pages that pertain to the deal. I figure that my price and my calculations should reflect what is publicly being declared as the income and expenses of the entity.
Lots of sellers have a problem with the request. Everything from the privacy issues to an acknowledgment that the numbers reported do not reflect the truth. It gets the conversation started as what the truth might be. If privacy is an issue then you either find another way to do the deal or walk.
The way is to shift the risk. Offer a price that reflects what you think is a realistic set of numbers and anything above that is dealt with through an earn out. I have done deals this way and the seller get some now and some later when the numbers come in.
John
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