Here are some quick tricks some of the rogue buyers play onto private business sellers:
The eager interest in your business A rogue buyer can be very charming and convincing. They will gain your trust very fast and you think that your luck is in finding such a “suitable” buyer. Money is never a problem, and you may even be told your business is worth full value. This is the courting stage…..gaining all your trust! The due diligence period Here is the extreme danger. This buyer is getting to understand everything about your business and how it operates, trade secrets, methods, list of suppliers and gaining access to your client base. Every business sale out there is different, and if your business is a clever niche market you created its even more dangerous to release such information.
Working in the business to get a feel of it When a buyer has the seller really spoofed, the next step is to “work” in the business for a week or two to get a feel for the business. This is where it is discovered how you cash up, where the money goes if its a cash business, and general security of the shop……they pretend to worry about security and the sellers assurances of how quiet it is and how “nobody comes down this road late at night” is the perfect tip off for a potential robbery.
The funds delay game I have heard of numerous sellers being duped into paying to release the buyers funds. remember, these con artist are well skilled to make you believe anything. If that game is not played, you are close to being alienated from this buyer, and you may well have put many other buyers off because you were convinced you have already sold the business. Just maybe their friend is waiting to come and make you an offer at half the value, because mentally you have moved on and were about to board the retirement boat, or semi committed to a different business, or career move.
The devious angle I had a seller come to us to sell his car bumper repair business. He was SO disappointed in himself for being gullible. He was selling his business privately and a potential buyer approached him. Gained his trust, worked in the business as a pre-handover period and suddenly pulled out due to a funding problem. Just to open up a few doors down in the same industrial estate under a very similar name, approached all his customers, undercutting him and snared two of his staff, gaining their trust when he was working there. This seller lost 50% of his business value!
How does a business broker spot a difference? It actually starts off with the first contact. Their reluctance to sign the confidentiality. We always ask for background information such as current business, funds available and experience. And we go and look them up, confirm with our accountants that they are who they say they are…..Also, there are MANY repeat enquirers we just ignore. They have been around for years and we know the names in our sleep. They respond to any and all adverts, and honestly, if a person makes 20 email enquiries into 8 different businesses then that in itself is a flag. Remember, a seller does not get multiple mails from 1 buyer because they only have 1lsiting. Its odd for someone to enquire about a barber business for 40k, and then a restaurant for 250k followed by an enquiry into a ladies clothing boutique.
The old saying “Leave it to the professionals rings true” Article by Raal Nordin DEAL CHASERS IRELAND