An old contact asked if I could meet with a friend who received an unsolicited offer for his business.
They gave me a sheet of paper with an offer outlined and asked if it’s a fair price I said, “I don’t know” and here’s how it went:
- Q: What are your sales and profits? A: Sales are about $XX a year and I don’t know about profits.
- Q: You don’t know how much you make? A: I don’t pay attention to it and we made profits higher a couple years so I could buy another house. (I since found out the expenses were pushed forward.)
- Q: I see part of the deal is they pay your back taxes. What taxes? A: I don’t know.
- Q: Is it payroll taxes? A: No, we use a payroll service.
- Q; Corporate taxes? A: (from friend) It’s not a corporation it’s a sole proprietor.
- Q: So, are you behind on estimated taxes? A: Yes, that’s it.
- Q: (Shifting topics) Why did you get this offer? A: The buyer used to work for me, quit recently, and he knows my key person is leaving soon. He knows I’m in trouble.
- Q: Can you do the work of those two (with help)? A: No, I work on the jobs, and it would take me at least three months to figure out what they do. From friend – things would collapse by then.
This guy is the opposite of an owner-operator, he’s an owner-worker. A lot of lessons here from an owner who really doesn’t know his business. I’m glad this is the exception.
“Once is happenstance. Twice is coincidence. The third time, it’s enemy action” Ian Fleming