Hindley Burgmaier Group knows how important making an informed decision to buy a business is. We are proud to share a key insight on a recent due diligence report we generated for one of our clients.
A business is for sale in Texas, and our clients are located in New Mexico. Our client’s are under the impression that the facility on the market is what is referred to as an “absentee owner business.”
What does that mean exactly?
Let’s say I’m the client buying the business. My understanding is the business runs itself. I don’t have to be there for it to be successful.
Hindley Burgmaier runs a due diligence report. We tell the client our findings. This purchase would not be for an absentee owner business. This is a risk, but not necessarily a red flag.
What is the issue then? This business is an industry that uses a lot of gift cards. We discovered in our due diligence report that the business did not track any of those gift card liabilities. Our clients would essentially transfer ownership with no idea what that gift card liability was. As can be seen the current owners were not tracking that liability, which is a red flag.
If those calculations had materialized then, Hindley Burgmaier Group may have been more confident in recommending the purchase to our client.
As a result of our findings, our clients avoided making a costly mistake. Above all we love saving our clients money. Due to our efforts we saved our clients over a million dollars. You can request a due diligence report for a potential business transaction by booking a call with our helpful team.
