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Cancelling initialed contract for business in Florida

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S

sceramics

Guest
The people who wanted me to purchase their business made an offer of financing the whole thing, 3 out of 4 of us sat down to discuss this. We ironed out a tentative agreement, the 3 of us initialed it, <the wife was not there>. I did ask for last years income/expenses to justify the price he was asking, but he said that it was intertwined with another business, which I found strange. We did this Friday evening, and now I am hesitant in signing the final papers. I ran this business for 3 weeks, before the trouble I previously mentioned happened, it's been closed for 2 weeks and I know more customers have chosen other ceramic shops to go to. Unless I know what the shop was bringing in every month, how can I be sure that I will make the rent and loan payment. Am I now obligated to follow thru on this deal?

Thank you for any assistance you may give me.

Sara
 


HomeGuru

Senior Member
<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by sceramics:
The people who wanted me to purchase their business made an offer of financing the whole thing, 3 out of 4 of us sat down to discuss this. We ironed out a tentative agreement, the 3 of us initialed it, &lt;the wife was not there&gt;. I did ask for last years income/expenses to justify the price he was asking, but he said that it was intertwined with another business, which I found strange. We did this Friday evening, and now I am hesitant in signing the final papers. I ran this business for 3 weeks, before the trouble I previously mentioned happened, it's been closed for 2 weeks and I know more customers have chosen other ceramic shops to go to. Unless I know what the shop was bringing in every month, how can I be sure that I will make the rent and loan payment. Am I now obligated to follow thru on this deal?

Thank you for any assistance you may give me.

Sara
<HR></BLOCKQUOTE>

No because you said that it was a tentative agreement and have not yet signed the final one. You need to review all pertinent documents. When I buy a business, I demand to see due diligence information such as proof of business license and legal entity such as corporation or partnership papers, the last 3 years income/expense statement, profit/loss statement, balance sheets and State and Federal tax returns. If the accounting is combined with other businesses, I ask for a separation and certified docs for ony the subject business. In other words, the Seller/business owner must provide the numbers of only the business that is being purchased and provide signed and notarized statements that the income and expenses are actual and as stated and represent the true numbers. Sometimes I request a CPA audit and a legal review and opinion.You need to know a lot more about the business such as accounting methods ie. cash or accrual, fiscal or calendar, accounts/notes payables and receivables, term of lease and monthly lease rent. common area charges, utilities, taxes current or delinquent, customer base, goodwill, FF & E, inventory of products etc.
 

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