BIO: For more than 30 years, Ted Leverette, The Original Business Buyer Advocate, has been helping people worldwide find and buy the right businesses the right way.
STORY: Ted bought a business for eight figures only to discover it was sinking in debt.
LEARNING: Hire the right kind of advisors when buying a business. Do your due diligence and get to know how the business works before you buy it.
“No matter how naive you think a business owner is, his lawyer and accountant aren’t naive and will negotiate you into a bad deal.”
Ted Leverette
Guest profile
For more than 30 years, Ted Leverette, The Original Business Buyer Advocate, has been helping people worldwide find and buy the right businesses the right ways by training and assisting them through any or all of these phases: Preparation, targeting, search, due diligence, financing, valuing, negotiating, and transitioning into their acquisition or merger. Ted positions clients to be the 1st choice of brokers and sellers. And to complete more-profitable deals sooner with less aggravation at a lower cost.
How? ACTIONABLE guidance. Read his how-to books (available on Amazon). And then let him help you deploy his proven best practices.
Worst investment ever
Ted bought a privately owned company for eight figures only to find out it was deep in debt. He lost a substantial amount of his investment in paying off this debt.
The business had three operations: A consulting operation, 11 travel agencies, and a travel agent training school. The operator of this holding company knew the travel sector well. But he didn’t know about managing the holding company, which is what Ted was buying. He didn’t know anything about finance, so he delegated money matters to an inept accountant. When Ted asked this guy why he wanted to sell, he said it was because he had a different interest in another industry with bigger potential.
Ted’s mistake was letting the seller’s lawyer do the purchase and sale agreement. He also relied on the company accountant, who had been pulling off shenanigans that left the company in debt.
It took months after Ted got control of that company to negotiate with the unpaid vendors who wouldn’t perform without a payment plan. The amount the company owed these vendors was seven times larger than what was represented to him before he bought it. Ted paid the company’s debt liability for a whole year to untangle the mess.
Lessons learned
- Success does not always breed success.
- Sellers and their advisors won’t always tell buyers enough of what buyers need to know to make informed decisions about buying the company.
- When purchasing a business, hire the right kind of advisors, particularly lawyers and accountants who know what they’re doing.
- Don’t let buyer competition get you into a bad deal.
Andrew’s takeaways
- Do your due diligence, get into that business and understand what’s going on in detail before you buy it.
- Have professional advocates that are fighting for you.
- Get monthly financial statements that are on time and accurate. Doing so is a sign that your accounting system is in good shape.
Actionable advice
Don’t be a do-it-yourself businessman. Lean on people who know what they’re doing. Read books on the topic from legitimate deal makers, and avoid the charlatans out there trying to sell advice to people buying businesses. So do your homework because no matter how naive you think a business owner is, chances are his lawyer and accountant are not that naive, and they’ll help negotiate with you, and you could end up in a bad deal.
Ted’s recommended resources
No.1 goal for the next 12 months
Ted’s number one goal for the next 12 months is to keep doing what he’s doing; trying to save the lives and money of people looking for businesses to buy.
Parting words
“Thanks, Andrew. This was fun.”
Ted Leverette
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