Please remove the post if it's not allowed
I'm a Florida resident and my background is in finance (Not a CPA) and I'm in the process of buying an existing dry cleaning business that has been established for 30+ years. I was hoping if I can get some feedback and help me identify any red flags?
The process started 2 months ago. Owner is a nice (it was their family owned business) and ready to sell the business. Owner's agreed to owner financing over a 5 year period at 6% rate. I've reviewed their financials (tax returns, P&L statements, and even the general ledger from the past 3 years). I've only signed off on the buying agreement but haven't put my deposit down yet.
I cross referenced the P&Ls to the general ledger, tested out samples (picked a random month every year and compared debits and credits to the "cash in bank statement). Things looked good.
Had a CPA look at the 2019 tax return and found minor discrepancies.
The location is great and it's fully equipped with 10+ tenured employees. I can learn the business fairly quick.
The machines are fully depreciated but operable (owner has been maintaining them and servicing them regularly - general ledger checks out)
The original buyer agreement had 2 back out clauses so I could get my $5,000 refunded if -
A. SBA loan doesn't go thru B. Favorable lease conditions
Since the owner has offered owner financing, this will be amended.
This is where I could use help and feedback -
What condition and clauses should I ask the broker to write so in case something doesn't work out, I can get my $5,000 refunded?
Should I still hire a CPA to cross check my work?
If I hired an attorney, how would this relationship look like?
How can I request an appraisal and inspection?
Should I go ahead and make my $5,000 deposit so the owner knows I'm serious about buying?
What am I overlooking? What am I not thinking about?
Buying this business will help put my family and I in a much better situation. Could be life changing!
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