Those of you who regularly read this newsletter know that I usually discuss topics related to selling a business. At the end of last year, I was approached by Audiology Online and asked to create a presentation targeting first-time business buyers. I gave the live presentation in February, and a follow up article is forthcoming. Below you will find an excerpt from the article and a link to the presentation.
Tip #4: Be Patient with the Seller
In order to avoid the frequent conflict that can arise over the exchange of information early in the negotiation, the article recommends the following approach:
1. Assume everything the seller tells you is true. This may sound naive, but the point is that you should ask yourself this question: if everything the seller tells me is true, do I want to buy this business? If yes, how much am I willing to pay?
2. Make an offer that is subject to due diligence. Due diligence is the detailed research and analysis of a company that you will conduct prior to completing the transaction. In structuring your offer this way, you give yourself the ability to walk away from the deal if you are not satisfied with the results.
3. Once the offer is accepted, use due diligence to answer any open questions about the business. Due diligence is complete when you have satisfactory answers to about 80% of your questions. A 100% satisfaction rate would result in an absence of risk, and if there was no risk every person in America would own a business.
4. Make sure your attorney includes a Representations and Warranties clause in the purchase agreement. This helps protect you against false claims made by the seller and certain unpredictable liabilities.
Watch the presentation
If you would like to watch the presentation “Be Your Own Boss: 5 Tips for Buying an Audiology Practice”, go to (free registration required):
May 2012 Update: The full article is now available at: