Are all cafe business brokers Liars and Con men?

thecafeninja

Hi Guys,

I do a lot of work with people looking to buy cafes - I typically do pre-purchase assessments or analysis of financials (if there are any!)

I am continually shocked to see business brokers selling cafes with what I can only describe as "fantasy figures" - based on no tangible evidence.

Have we discovered an occupation even lower than used car salesmen & real estate agents???

If you bought a cafe, what were your experiences with the broker like?

Cheers,

Craig Reid - The Cafe Ninja (www.thecafeninja.com)

Lovey

This is only a casual observer's position, having never bought or owned a business. The brokers are working for the owner and of course it's in their interest to 'pump' the figures for a bigger commission. That's why you have ongoing employment, as you're there to look after the buyers interests and cut through the BS figures 😉. All the best, Steve.

askthecoffeeguy

I think the question to be asked is also if you sold a cafe what we're you're experiences with the broker like? Mine added value to my resale and earned every cent of his not inconsiderable commission... Like any other profession some are better at it than others, and its worth shopping around till you find a good one ACg

Dry_bean

Lovey wrote:

This is only a casual observer's position, having never bought or owned a business. The brokers are working for the owner and of course it's in their interest to 'pump' the figures for a bigger commission. That's why you have ongoing employment, as you're there to look after the buyers interests and cut through the BS figures 😉. All the best, Steve.

('pump' the figures) In other words falsify! which in my mind amounts to fraud. Its one thing to have the buyers best interest at heart, another altogether presenting potential purchasers with dodgy figures for analysis.

askthecoffeeguy

My understanding is that a section 28 providing an accurate account of the figures needs to be signed off by a practising accountant - and that the accountant can be held liable if the figures are misrepresented Of course there's always some haggle and too-ing and fro-ing involved in the sale of a cafe and it works both ways as sellers often come down from their original asking price to meet buyer expectations And as always it's a case of due diligence and buyer beware ...

thecafeninja

Here's how it usually goes in my experience (particularly with "cheaper cafes"): - Broker creates fantasy figures showing profitable business based on loose info from owner - Buyer asks for proof of figures - Broker says there are no figures The end! But even with good figures available the brokers will always fudge the figures. An example from a recent pre-purchase inspection - broker claimed it was making $80K when in fact it was making almost nothing (approx $10K). I always ask my clients to ask for certified financials, if they won't give those then BAS returns are next, if they won't give those I ask for 3-6 months purchase receipts. Sometimes they just refuse at which point I advise my clients to walk. Yes, it keeps me in business but I think it should be illegal to fluff the figures so much. I know it would put me out of a job but I'd change the law so that businesses for sale would only be allowed to advertise figures based on certified accounts or BAS statements - no fantasy figures! Cheers, TCN

cafelawyer

some brokers are called Con (artist), most of them are just out for your money a good broker can stretch a rubber band until just before breaking point. the rubber band is you. I just rediscovered this forum and I am amazed at how content driven it is. must tune in more often. (mod note: toned this one done a bit to remove any overt ethnocentric remarks)

askthecoffeeguy

nice one cafe lawyer - we welcome your input

hazchem

cafelawyer wrote:

I just rediscovered this forum and I am amazed at how content driven it is. must tune in more often. (mod note: toned this one done a bit to remove any overt ethnocentric remarks)

nice to see you here sir!

cafelawyer

hazchem wrote:

cafelawyer wrote:

I just rediscovered this forum and I am amazed at how content driven it is. must tune in more often. (mod note: toned this one done a bit to remove any overt ethnocentric remarks)

nice to see you here sir!

Likewise ! The threads and content on this forum are brilliant.

Dry_bean

cafelawyer wrote:

some brokers are called Con (artist), most of them are just out for your money I just rediscovered this forum and I am amazed at how content driven it is. must tune in more often.

Welcome Cafelawyer, good to see you here. Had to think about the term (content driven) surely all forums/fora are content driven be it positive or negative content. I feel its a personality thing as to the type of interaction your looking for, must admit I get sick and tired of all the confrontational and argumentative argy bargy that goes on in some places, the most innocuous statements are invariably challenged and rapidly descend into slanging matches, guess if that's your thing go for it. The great thing about this site is that up to this point the content has been very positive, members are able to discuss and at time disagree in a civil manner without having to resort to snide remarks and name calling, sure there's a bit of tongue in cheek at times but no one seems to get too bent out of shape over it. Good to see the post rate slowly climbing and new faces appearing. 🙂

cafelawyer

thecafeninja

Hi Cafelawyer - I spoke to you some time ago - would be good to join forces. I am having my book about the process about buying a cafe published next year but I'd love to have your input... Can you drop me a line - edited at request of poster Thanks, Craig

cafelawyer

thecafeninja wrote:

Hi Cafelawyer - I spoke to you some time ago - would be good to join forces. I am having my book about the process about buying a cafe published next year but I'd love to have your input... Can you drop me a line - edited at request of poster Thanks, Craig

Craig, just sent you and email and yes mate I reckon the more people can learn from veterans the better.