Merle Norman franchise for sale
- You have searched for various businesses for sale and now you have found the perfect business to buy. The company is represented by a reputable broker. You agree to the terms and now you want to sign the contract and start the due diligence phase. Everything the seller and broker have told you sounds good and feels right. What happens next? How deep do you need to dig?
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- Deep, my friend. Yes, most real estate agents are very reputable. But remember, they only get paid if the deal goes through. And also remember that the agent represents the seller, not you.
So what should you look for? Here is a partial list:
1) Negative business trends;
2) Negative industry trends;
3) Expected but unannounced competition;
4) Any suggestion of a personal issue that would dissuade the seller from selling;
5) Any partner, spouse, shareholder or related party who would prevent the seller from selling;
6) Existing or previous credit problems with banks or suppliers;
7) Any pending litigation against the company;
8) Any claims, liens or encumbrances against the company or the company's real estate;
9) Any unpaid income, sales, FICA, unemployment insurance or other taxes;
10) Timely filing of all tax returns;
11) Anticipated but undisclosed loss of one or more major customers;
12) An up-to-date contingency plan;
13) A current management succession plan;
14) Outdated or non-existent policies and manuals (including personnel manual, training manual, safety manual and sexual harassment policy)
15) Retention of key employees;
16) Retention of key accounts;
17) The recent bad publicity;
18) Expiring/extended lease on a property;
19) Leases that are not transferable;
20) Restrictions on the expansion of the business or property;
21) investments that have reached or are approaching their expected life;
22) A defined reserve for capital improvements;
23) Obsolete equipment and machinery;
24) Overvalued inventory;
25) Product obsolescence;
26) Expiring licenses, patents, franchise agreements, etc.
27) Difficulties in the procurement of raw materials, products or services;
28) Expiring vendor or supplier agreements;
29) Recent increases in all types of insurance rates;
30) Employee awareness of the company sale;
31) Customer awareness in relation to the sale of the company;
32) Sensitization of vendors and suppliers to the sale of the company;
33) Non-compliance with safety and environmental requirements;
34) Potential union or other employee-related issues;
35) Any problems related to the website. As you can see, there are many issues that really need to be investigated. Many of them are very technical. You will probably need to enlist the help of other professionals. A lawyer and an accountant are a must.
- Remember to think ahead when looking for businesses for sale. Do not trust everything the broker and seller tell you. You are making an important decision; make sure it is a good one.
