Clarification/Follow-up by netto on 03/10/04 5:29 am:
I'm kinda confused kkemper, let me see if I got it right.

No money down anywhere until due dilligence is done?

I thought it went like this:

1. letter of intent
2. due dilligence
3. purchase contract
4. closing where money and ownership changes hands

Where in these 4 steps does the down-payment fit in?

And with the 72 hours with right of refusal...do you mean that he keeps it on the market, I start due dilligence, and if he gets another offer from another buyer before I'm done with due dilligence that he'll give me 72 hours to finish and accept or decline the deal????

If so, where does that 72 hour window get specified...in the letter of intent?

How long does due dilligence take? I'm guessing my lawyer and/or accountant has to:

1. check that sales tax payments are current
2. payroll tax payments are current
3. there is no outstanding litigation
4. that the seller is authorized to sell the business
5. the assumability of the lease
6. see if there are any outstanding agreements or contracts with suppliers, etc.

Anything else?

I've read several books on buying a business, but they don't seem to answer my questions.

Thanks so much for your help.

Clarification/Follow-up by netto on 03/10/04 8:44 am:
Test my sincerity?...doesn't my paying an attorney to draw up the letter of intent do that though?

Fee for looking into company information? This guys doesn't even have a tax return. He bought the biz in 2/03 or 3/03, and his mother-in-law can no longer work it. He said he's not filing income tax unitl August (didn't know that was doable).

All he's going to show me is the supposed numbers he's goign to give his accountant. That doesn't mean much of anything to me.

As far as finding out if his sales tax and payroll taxes are up to date, does he get something from the state to prove that to me?...or do I pay to dig that out?

So many other people said this isn't normal, including a couple of attorneys from free law advice sites.

Do you think I should tell him what my all-cash offer will be to see if he'd accept it before having the attorney write the letter of intent?

Thanks Leo.

Clarification/Follow-up by LEOLINGHAM on 03/12/04 6:01 am:
As I mentioned , each case is different .

Each case should be negotiable on handling
the subject.

In your case, if you feel unconformtable
with so much of uncertainties/ lack of information

then offer through your legal counsel

-letter of confidentiality

-your offer under conditions

-no down payment.

There is a good chance, the person
may turn around.

My previous comments were based on my
experience --2 cases in the last 3 years-
where I was involved personally as a member of a team.

In both cases, the purchasing price around

45 mill US dollars was involved. The
buyer paid a token deposit before the
due diligence.

Each case is different.

regards

LEO LINGHAM