Seller Red Flags

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by a searcher from Washington and Lee University
in Cambridge, MA, USA

6yrs ago

Seller Red Flags

What red flags have y'all learned to pay attention to when sourcing deals?

4 Likes

364 Views

reply by an investor 6yrs ago
in White Plains, NY, USA

I agree with Bruce. There are many!

Stephen Covey writes "seek first to understand".

Don’t cut the “seek first to understand” process short!

Ask if he is really ready to sell his BABY.

Ask WHAT he plans to do in retirement.

Ask WHEN he decided to sell his business. His answer will tell you whether or not his decision was based on a thoughtful, planned exit or if he is selling due to other pressures; bad market conditions, the business is failing, poor health, impending divorce, new competition.

Ask HOW QUICKLY he wants to sell his business.

Ask WHERE he intends to retire.

Ask if he has built enough WEALTH to live the way he wishes during retirement.

The answers to these questions will help you expose red flags.

reply by a searcher 4yrs ago
from University of Illinois at Chicago in Montague, MI, USA

Body Language & Actions ironically, if you are able to see them over Zoom or inperson. Tone too can help with picking up on things.

I find most redflags in the operations or finance areas though, especially around tech debt and lack of documentation.