Jungle Law #1: Lawyers Are Deal Killers! There certainly is an important role for a competent commercial law attorney to advise and prepare the legal structure of a business purchase and sale transaction. The problems arise when lawyers see themselves as business negotiators whose mission is to get the "best deal" for their clients. They frequently forget that the "best deal" has to involve both parties, the buyer and the seller, and that compromise is usually the best solution.
Jungle Law #2: Caveat Business Emptor; (Let The Business Buyer Beware!) As a matter of basic principle (and law in most States), all business brokers dealing with the public are bound to be honest and forthright in their conduct concerning the businesses that they represent for sale.
Jungle Law #3: A Business Is Worth Only Whatever Someone Is Willing To Pay For It At A Particular Point In Time! Buyers and sellers are natural adversaries; the sellers want as much as they can get and the buyer wants to pay as little as possible.
Jungle Law #4: A Business Buyer Is Really Buying A Stream Of Earnings! The assets of the business are just the tools of the trade that enable an earnings stream to be realized. Without the earnings stream, the business essentially has no value.
Jungle Law #5: Ignore All Claims Of Unreported Income! This is a very sensitive subject known as unreported (to the IRS) cash sales.
Jungle Law #6: Most Sellers Are Fibbers! (Or They At Least Stretch The Truth) Of course, this is not a completely true law of the jungle. Most sellers are honest people trying to get by in life like everyone else. However, a buyer should approach all information provided in the sale with some skepticism.
Jungle Law #7: If A Seller Really Wants To Sell, You Probably Shouldn't Buy! Whenever you look at any business for sale, you should approach the situation with a great deal of caution. You should make it your business to verify all of the facts possible about the business, including determining the reason for sale.
Jungle Law #8: 99% Of Potential Business Buyers Never Buy A Business! This alone may be reason enough for a seller to retain a business broker to represent him in selling the business. A professional broker knows how to sort through the many non-qualified potential buyers to get to the few who actually do have the means and motivation to buy a business.
Jungle Law #9: Always Assume There Are Skeletons In The Closet! Most businesses have some negative feature(s) that the seller will be reluctant to talk about.
Jungle Law #10: Someone Will Always Get Cold Feet Just Before The Closing!
Jungle Law #11: Negotiations Must Stop At The Signing Of The Purchase And Sale Agreement! Trying to reopen negotiations after a Purchase and Sale Agreement has been signed will most likely lead to a collapse of the entire deal.
Jungle Law #12: After Buying A Business, Do Not Change Anything (At First)! Of course, this doesn't hold true if you're buying a turnaround situation; but in general, if the business you are buying is profitable, leave it alone while you learn how to manage it in accordance with the status quo.
Jungle Law #13: Common Sense, The Transaction should make sense to you.