This article could also be called “expectation management (or lack there off)”. I have seen both sellers and brokers make the mistake of overselling a business. There are many ways a business can be “oversold”. Examples might include, “the business is doing $2 million a year” when it really does $1.6 million a year. Any garden variety of exaggerations would qualify, such as, the business has been growing steadily for the last 4 years, or the business has 300 customers, or no customer makes up more than 10% of the business when theses statements are not accurate.
The most common momentum killer or even deal killer itself is when the Seller or his agent has been too overzealous in presenting the financial condition of the business. They may have added back salaries and other operating expenses that a Lender or CPA would consider germane to operations or presenting historical revisionism versus identifying legitimate non reoccurring expenses or extra ordinary items/events. Sometimes this overly rosy presentation is innocent. It can be merely giving the most recent financial statement from quick books before having an accountant’s look over.
Business Search and Consulting, Inc. are business agents in California and offer business appraisals and valuations. They have offices in Los Gatos, San Francisco, Mountain View, Campbell, Santa Clara, Fremont, Milpitas, San Mateo, San Carlos, Redwood City, Palo Alto, Burlingame, Sunnyvale and other places. You can get in touch with them at 408-636-2155 or mail them at zbizfinder@pacbell.net. You can retain the services of a CVA from Business Search and Consulting as an ‘impartial expert’ or as a ‘client advocate’.
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