Hi all,

I have an odd predicament. I am buying a business that has a lot of technical stuff that I need to be trained on (included in the payment for the business). The current owner wanted to take a downpayment, have me as a partner to train me, then take the balance when we were completed. I required tax info from an accountant, and all expense reportings, profit and loss, and etc. We signed a contract that was to be for a period of two years for training and transferring everything. I cannot get him to comply with any of it in a professional manner.

Every time I try and get him to train me, there is some reason why he can't. I have tried to get the credit cards into my business name, banking, etcetera, to have everything in my name. All the business tax info/expenses he has provided are hand-done Excel spreadsheets. (He has 8 divisions, I am buying one - they are all reported on one sole proprietor's taxes so he will not give me copies as the rest does not pertain to me).

I have made written requests for a third-party accountant to do the accounting (for his accountant to provide all the expenses to them, and then provide me a reporting). I have no substantiated proof that the business is worth what he says it is; I need to know that the actual expenses are not funding the other 7 divisions. or are they? As a partnership, we have made plans to expand a portion of the business which I have funded. Nothing has been paid back to me (profit-wise) in two years, and I still have no documentation supporting his claims.

With that said - I have given him the $30K+ downpayment already and am thinking he will treat it as non-refundable if I walk away. But we are ending the timeframe of the contract and nothing on his end has been done yet, and I don't want to pay him the balance without proof that it is worth it.

Do I walk away?

At this point I view it as either: Stick with it, and have an uncomfortable time for the next 6 months or so, do something else to gain an income, pay him, get rid of him, learn on my own. OR do I walk away, losing almost $40K, writing it off as a lesson learned, and move on. (I would hope he would refund some, but I have been sharing office space with someone so he may want to charge me rent for the two years (WHICH should only be about $6K realistically). Me personally, I'd just view the new MAC I bought as a $40K computer.

Been there, done that, waiting for the results of the appeal...

I agree with the previous poster. You need a lawyer; and before you throw more money up against the wall, you need to be aware of what a lawyer will cost you in money and in time. And if the lawyer says $3,000; quadruple it. Know also what happens if you win; would your partner have an automatic appeal this could be tied up in the courts for the next 5 years or longer?

That said, you have a contract. If your partner is not complying with the contract, you could have grounds for breech of contract and can demand your money back and I wouldn't be surprised if you couldn't claim interest or damages on top of it... But, it will cost you at least money and time; if not more.

On the other hand, you could simply have a disagreement, miscommunication. Are there others in the company who can train you? Do they know that you are scheduled to take over... learn what you can in the meantime.

And even so, if you end up suing your partner for breech, put it into your head before you do so, that you are walking away, because the lawyer's letter will close whatever door you currently have open and will put you in the judge's hands.

Good luck.

Tina Brooks, VP Marketing
Brooks Pepperfire Foods, Inc.
Makers of Peppermaster Hot Sauces
http://www.peppermaster.com

Eat more peppers!

It sounds like most of the error was in the beginning. When given the opportunity to buy a business (especially when it is a good deal) people tend to be in a rush. The best way to evaluate a business' worth is with the ole' EBIT (or EBITD or EBITDA depending on the type of business). If he can not tell you: EARNINGS BEFORE INTEREST & TAX for that division of his company, I wouldnt get involved. At this point, I would definately get a lawyer involved and stonewall him with a letter stating that as business partners he should, in good faith, disclose all relevant financial information. If he doesn't, then threaten (and be prepared to follow though with) to litigate him for the money you invested.

My two cents.

A business with no sign is a sign of no business.