Resources for/experiences with informal/poorly documented businesses?

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January 11, 2024

by a searcher from Brown University in Boston, MA, USA

Obviously, cautionary tales abound here, but for the purposes of the conversation, assume the best intentions (if not the best practices). Has anyone looked at the space or read about it?

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Reply by a searcher
from Colgate University in Charlottesville, VA, USA
Pretty common especially in the "main street" end of the market. Generally seller will be expected to put in the legwork to get things documented and pulled together, as a prerequisite for beginning marketing the business for sale. If you want an edge in the deal, but also to take necessary risk mitigation steps, I might help the seller with some of that legwork, in exchange for ~3 months of exclusivity to submit an LOI. It will help them do what's necessary to ever sell their business, while giving you first refusal and probably a bit of preliminary DD along the way.
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Reply by a searcher
from Brown University in Boston, MA, USA
Thanks David - very helpful. On deals like this - micro, informal - is there a rule of thumb for hours/cost of DD vs deal size?
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