Discussed our pending lawsuit with our attorney this morning. Looks like we'll probably be taking back the manufacturing company we recently sold.
Tip to those of you buying a business who owe on a note: always, always pay your note on time. You may have disagreements with the seller, but you still need to make the payments - otherwise, you'll loose the company you've spent so much resources and time buying and building.
If the seller has agreed to finance a portion of the business in the form of a secured note, then the seller has a secured interest in the business and its assets. Keep that in mind. The seller has a right to enforce the terms of the note - a no-brainier. If you don't pay, you can - likely will - loose the company. Or, the note holder can call the entire balance of the note due, plus legal fees, accrued interest and penalties, and other collection costs associated with the note.
I believe I'm pretty reasonable - but these guys haven't made a single payment and they haven't tried to reconcile the balance due. We've even offered to take a slight discount and waive the legal fees and accrued interest due. We've also offered to simply take back the collateral (the business) in exchange for debt forgiveness. No go. Apparently they want to fight it out.
Bring it on.
On another note, spoke briefly with our CPA today - hoping to get some advise on structuring our companies differently going forward. We'll meet with early next week.
Had lunch with an attorney I've met a couple of times - great guy. He typically represents banks trying to seize assets from debtors. (He joked that I should have hired him to go after the game-player-buyers who've decided to do a no-pay on us). Found out we're both LDS and served missions during the same time (96-98), and that he served in or near the same mission as one of my best friends, Ben Davis. Small world.
Found out several positive developments have recently come into play for the owner of the companies we were looking to buy out and turnaround:
She's not too sure she wants to sell to us at this time. Wants another two weeks to think our offer over. After she meets with a possible joint-venture partner/investor she'll make up her mind. Told her I think she's perfectly capable of turning around the company herself, if her heart is really in it. I think it is. I wish her the best of luck and have opened up our services to her anytime she may need us in the future.
Talked with one of my business partners who's an investment banker about the deal as he's been with me on this one from almost the beginning. We still need a lot more information before we can do any forecasting or financial modeling at this point.
Spoke with several business note buyers and brokers today - let them know our group is interested in being included as a possible buyer for business, real estate, and even non-performing notes that they may have. A few good leads.
All for now - ciao!
Do a Deal!