Yet another good call with a business broker to acquire an HVAC company. I did not hear anything which was a "No" to me, and when I asked what the next steps are, I am told the next step is to submit an offer. No tax returns, just seller provided "PnLs," no call with the seller, first step is to submit an offer. The last time I did so did not work out well for me and tied up my 1% EMD for a month. To only get booted off the deal later.
How is this supposed to work?
In my opinion:
1. Initial call with Broker
2. Tax returns provided, NOT an internal company provided financial statement LOL
3. Phone call with seller to see if I even like the guy/gal
4. Submit a solid offer I actually mean vs one which I was pressured into by a Broker
It just seems like the seller would get upset when I point out that their supplied PnL's don't match what is on their tax returns, and that is what my lender is going to work off of....
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by a searcher
from University of Michigan - Ann Arbor
in Reno, NV, USA
in Reno, NV, USA
1yr ago
Correct Order of Operations When Submitting an Offer
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by a searcher
1yr ago
from Massachusetts Institute of Technology in Boston, MA, USA
from Massachusetts Institute of Technology in Boston, MA, USA
With leverage on side of the seller/broker, ( if they have a good business to sell they would naturally have several buyers/buyer inquiries that they are trying to sift through): so, if they are asking for an offer, you may not have any other choice but to submit an offer to sort of "stay in the game".
Your approach is a perfectly reasonable one for getting to an LOI , but on the same token you don't really have a view into what is happening in the seller/broker's deal making world beyond what you are told. So, might as well submit an offer and meet the broker where they are.
Furthermore, if you do make an offer, do make sure that you state the assumptions for your offer (for instance that the offer is based on the financials provided) and also state why you are a good buyer for this particular business - qualifications, background etc. And, on the letter instead of sending in a signed letter, leave it unsigned, and you can state that this offer is subject to review by attorney. If the offer is an attractive one for the seller, rest assured, they will come back and talk with you and then you start to have the real buyer-seller discussions, have a signed LOI and also move forward with diligence etc.!
Your approach is a perfectly reasonable one for getting to an LOI , but on the same token you don't really have a view into what is happening in the seller/broker's deal making world beyond what you are told. So, might as well submit an offer and meet the broker where they are.
Furthermore, if you do make an offer, do make sure that you state the assumptions for your offer (for instance that the offer is based on the financials provided) and also state why you are a good buyer for this particular business - qualifications, background etc. And, on the letter instead of sending in a signed letter, leave it unsigned, and you can state that this offer is subject to review by attorney. If the offer is an attractive one for the seller, rest assured, they will come back and talk with you and then you start to have the real buyer-seller discussions, have a signed LOI and also move forward with diligence etc.!
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by a searcher
1yr ago
from University of Toronto in Toronto, ON, Canada
from University of Toronto in Toronto, ON, Canada
In my opinion...
1. Initial call with broker
2. Preliminary materials (CIM, internal financials, etc.)
3. Call / meet with seller
4. LOI
5. Diligence (tax returns, deeper dive, etc.)
6. Offer
1. Initial call with broker
2. Preliminary materials (CIM, internal financials, etc.)
3. Call / meet with seller
4. LOI
5. Diligence (tax returns, deeper dive, etc.)
6. Offer
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