I’m talking with a seller who has a business broker involved in the deal. I have signed their non disclosure agreement and have seen their financials and tax returns. They have requested my personal financial statement listing my assets and liabilities. My lawyer told me that they must sign a non disclosure agreement or something like that prior to me giving them this information. Actually, he says without it, I should find another business. Is he correct?
I completely disagree with your attorney! Feel free to send him a copy of my reply as well.
So why am I being so harsh? Most attorneys, by their very nature and training, want to eliminate every possible risk for their client and this is understandable. However, one must consider the environment and particulars of each situation or you risk taking positions that simply do not make sense or put every deal in jeopardy. On the other hand, the good transactional attorneys protect their clients and once they know that the client wants to get the deal done, they make it work.
Let’s look at this situation: the seller/broker has provided you with internal financials and tax returns which are extraordinarily confidential documents. They obviously have faith in your sincerity and ability to execute the deal. All they have asked in exchange is a list of your assets and liabilities. They have not requested bank statements or any other pertinent back up data. They simply want to see that you have the financial capability to complete a transaction. If you are interested in this business then I would provide this information to them without question and forget about getting a non-disclosure from them. Above all, I certainly would not adopt the “take it or leave it” strategy that your attorney has suggested.
As a secondary note, while having an attorney on your team is paramount to any transaction, unless I’m mistaken, you really may want to reconsider this individual because there will ultimately be some points where you will have to be flexible in order to get this purchase done. Of course you must be properly protected, but the goal is to also buy a business and my gut tells me that this particular attorney will find a way to undo every deal.
As a final note, I must say that I’m glad you’re not taking you attorney’s advice without seeking someone else’s opinion. In fact, it’s a great sign of someone who can make decisions and this is a key aspect to being able to pull the trigger on a business down the road. Well done!
|Get more expert advice in Richard Parker's How To Buy A Good Business At A Great Price - the most widely
used reference resource and strategy guide for buying a business.
|Richard Parker is the author of: How To Buy A Good Business At A Great Price, the most widely used reference resource and strategy guide for buying a business. He has purchased ten businesses in his career and has helped thousands of prospective buyers worldwide learn how to buy the right business for sale. He is also founder and President of Diomo Corporation - The Business Buyer Resource Center.|