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Maureen Costello Wholesale Distributor What kind of mistakes do people make when buying a business? |
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| Sometimes people assume only good things are going to happen and they don't anticipate that something could go wrong. In the distribution business you tend to buy the business based upon the sales or the gross profit or the earnings associated with that existing business. But in the distribution business one of the important factors is having the lines to carry and I've seen people purchase distribution businesses and pay for everything that was there at the time that they bought it without getting the prior consent of the manufacturers that they are going to be representing and they end up not being able to continue to carry the line then all of a sudden they end up paying for something they didn't get. So I think it is very important to be sure that you are not paying for something that you didn't get. And it's not just true in distribution it's really just about anything. So many times people will structure a deal to say I am going to pay you so much maybe upfront based on equipment, inventory or whatever. And I am going to pay you going forward based upon the sales that continue to go on. And there are various ways to structure that, a lot of creative ways to do it and I think that people need to realize that they should only be paying for what they get. | |