Venting about a deal

searcher profile

May 28, 2024

by a searcher from University of Southern California in San Francisco, CA, USA

I'm trying to go under LOI for a franchise deal, and although the seller is trying to work with me over the other potential buyers, she's making it very difficult for me to tell her how much money she can get upfront because she doesn't want to send the full tax returns to the banks until she likes the upfront cash I can offer her. But I don't know how much cash upfront I can offer until she sends the tax returns to the bank and they can tell me how much they're willing to lend. I think she'll eventually end up sending the tax returns over to the banks, but it's dragging out the process and it's hard to keep my pipeline going while I'm trying to manage this. Just wanted to vent.

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
We see this a lot with sellers and brokers representing sellers. Typically when this is the case the tax returns do not end up matching the financial statements and it creates an issuing getting the financing done based upon the agreed purchase price. Sellers sometimes are just not educated and do not understand that at the end of the day everything is going to come out during due diligence and they are much better off showing all of their financial records in advance and getting the best option they can based on those records instead of playing games and holding out for a higher price based on the financial statements, which will not end up being a realistic price someone will end up paying.. Know you are not alone. This is very common. If you make an offer without this information and the tax returns are different, the seller has to understand you will likely need to revise that offer accordingly. Good luck and if you need any assistance analyzing anything on the deal we would be happy to help. You can reach me here or directly at redacted
commentor profile
Reply by an intermediary
from University of Virginia in Metuchen, NJ 08840, USA
It is a common issue with SMB sellers who are not very proud of their tax planning work. A good broker with a full pipeline tends to avoid such sellers (not sharing tax returns) to keep their process as clean as possible. I hope you get the tax returns soon and the numbers reconcile.
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