It was mid-month, not even close to a full moon, when I had three weird and similar situations occur with business owners.
- An owner told me he would be glad to sell his business, but nobody would see his financial statements or tax returns. Only his CPA and the IRS see them he said. It seems he had sold another business to a consolidator that only cared about revenue. All he had to do was prove his revenue and they were happy. He figured this applied to all business sales.
- My friend Tom Broetje with CFO Selections talked to me about a possible referral and warned me I’d have to explain to the owner why he’d have to share his tax returns. I guess he questioned why he’d have to show them to anybody (buyer, bank, etc.).
- Finally, we got an NDA from an owner and the last paragraph said the buyer needed make a $5,000 completely non-refundable payment just to see the financial information. When I said in my 25 years in the buy-sell industry I’d never seen or heard of this she replied, “Well, we’re pretty savvy businesspeople.” No, you’re not. You’re not motivated and just being annoying.
I know there’s a (small) trend of people buying houses without seeing them in person but they don’t buy sight unseen as they take virtual tours and often have agents onsite to advise them. People wouldn’t take a job without meeting their boss, reviewing the requirements, etc.
And that’s what a buyer’s analysis is, a virtual tour (see the financial information), “interviewing” the seller, and studying the product, processes, etc. This is normal and something the seller should do on a buyer, an employer on a new hire, and a business on prospective customers and vendors.