Untrusting Owner

September 27, 2024

by a searcher in Orlando, FL, USA

Hoping for some advice from the community.

I'm talking to an owner of a business that I believe has potential.

He is a salesman type and gives off an untrusting vibe. 61 years old, said he wants to retire. I think he still has energy and I'm concerned he'll start another similar business after a transaction. He sold one business in 2013 and started this company immediately after (what's to stop him from doing it again). Trying to find ways to derisk the transaction.

Here is what I've come up with:

1. Have him pay for the QoE
2. Get R&W insurance
3. At least a year of employee agreement
4. Decent amount of seller note that is forgivable

Anything that I'm missing?

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Reply by an intermediary
from University of Arizona in Denver, CO, USA

You have not provided any real depth here except to say he is a salesperson. Perhaps he just loves to start businesses. The ‘serial entrepreneur’ which I think is someone who can start but not sustain something. Did he start a business in violation of a non-compete? If so your distrust is well founded. If not, you ought to have a third party speak with him so you get a second opinion on his personality. It’s always possible that you are not wired like him. Of course your feelings could be spot on. Do your due diligence before you submit an LOI. You only submit an LOI if you are ready to do the deal and DD is a confirmation of the business as presented rather than a time to decide if this business is for you. Just a tip.

Reply by a professional
in New Hampshire, USA

Either bin the deal or make him sign a non compete for a minimum of 5 years, get a good amount of seller financing that payment is dependant on business revenue and try to get to know the guy a bit more. I have spoken with quite a few sellers over the years and a lot of them seem a bit off but its usually a bit of a defensive act as they love their business and want what's best for it... Maybe he doesn't trust you with his 'business baby' so try to put his mind at ease a bit if you can and then see if he will open up to you a bit more.

If you feel like you just cant trust him at all just move on to the next deal - there are plenty of fish in the sea and plenty of businesses on the market lol

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