Forensic Accountant

mad1son2

Dear All

I would like your help and advice please on a Business issue, Basically i lost 100K on a Kitchen business which i put down to poor Financial advice from the Accountant and Bank, I had a Solicitor who took the case on on a 'No Win No Fee' basis, he took it as far as he could but now it has come to a halt because we need to get a Forensic accountants report, approx cost £3000. I made myself Bankrupt last year and have no funds available.
i would really appreciate your advice and any ideas yon may have

Many thanks

Andrew

SomeBozo

Borrow the £3000? Ask the solicitor to give you the £3000 and up his fee if he wins?

I aint sure what kind of advice you want on the benfits board with regard to your post? You don't expect the tax payer to lend/give you £3000 for this do you?

If your solicitor is working the case and can't arrange £3000 to progress the claim, that speaks volumes!

Bozo

Bismarck

you'd be better posting on the small biz forum for advice. as somebozo suggested, £3K shouldn' be impossible for the solicitor to find if they're confident of progressing this.


good luck.

pinkshoes

As others have said, if your solicitor took it on "no win no fee", then surely spending a necessary £3k won't be difficult?? Offer for it to come out of the fee!

How on earth did poor financial advice from a bank and an accountant lose you £100k?? Yikes!

Conor_3

One thing the OP is forgetting in all of this is even if he wins, the money isn't his AFAIK and it goes straight to the OR.

mad1son2

Dear All

In Sept 2004 i purchased a Kitchen and Bathroom business as a going concern for £225,000, i was the sole Director. I used a locally based Accountant and Solicitor to help and advise me through the purchase. The business had been running successfully for 25 years with a final 12 month turnover figure of £525,000.
Unfortunately i had to put it into Administration just 6 months later, i believe this was down to poor financial advice due to the fact that we didn't have sufficient working capital, this was never spotted by the professional bodies.
I found out afterwards that we needed £100,000 to see us through the difficult early stages of trading, we actually had £15,000, we all know that any new business is vulnerable within the first 2 years but we didn't stand a chance. Eventhough sales turnover was a lot less than the previous owners, if we would have been more financially secure at least we would have had a fighting chance.
I had a solicitor who took the case on on a 'No Win No Fee' agreement and he took it as far as he could without a Forensic Acountants report, which is now my stumbling block, after the business closed i had to make myself Bankrupt with losses of £100,000 so now obviously i don't have any spare money and this report is going to cost £3000, which i need to take the case further.
Has anyone been in a similar situation or any advice how i can carry it further, any thoughts or ideas would be greatly received

Andrew

Savvy_Sue

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LittleVoice

mad1son2 wrote: »

Dear All

In Sept 2004 i purchased a Kitchen and Bathroom business as a going concern for £225,000, i was the sole Director. I used a locally based Accountant and Solicitor to help and advise me through the purchase. The business had been running successfully for 25 years with a final 12 month turnover figure of £525,000.
Unfortunately i had to put it into Administration just 6 months later, i believe this was down to poor financial advice due to the fact that we didn't have sufficient working capital, this was never spotted by the professional bodies.
I found out afterwards that we needed £100,000 to see us through the difficult early stages of trading, we actually had £15,000, we all know that any new business is vulnerable within the first 2 years but we didn't stand a chance. Eventhough sales turnover was a lot less than the previous owners, if we would have been more financially secure at least we would have had a fighting chance.
I had a solicitor who took the case on on a 'No Win No Fee' agreement and he took it as far as he could without a Forensic Acountants report, which is now my stumbling block, after the business closed i had to make myself Bankrupt with losses of £100,000 so now obviously i don't have any spare money and this report is going to cost £3000, which i need to take the case further.
Has anyone been in a similar situation or any advice how i can carry it further, any thoughts or ideas would be greatly received

Andrew

Sorry - don't know about a forensic accountant.

However - you mention the turnover in the year before you purchased the business but not its profit. Was it making a profit?

On the one hand you appear to have been led to believe that it was a "going concern" but on the other you suggest it was a "new business". If it was a new business but the first accountant was looking at the historical evidence and advising on that, where is the poor advice? What were you paying the accountant to do?

loveandlight

I understand what you mean mad1son2. Even though the business had been running for many years, as you became the new owner, it is then classed as a new business as it is new in your hands.

All you need to do is find a forensic accountant who is prepared to extend your solicitor credit. Usually although the arrangement is on a No Win No Fee basis it doesn't usually include disbursements like this. Your solicitor really should be advising you on what your options are as far as instructing expert advice is concerned. Usually experts will wait for payment as they like to get in the good books of the solicitor in case they might get used again on another matter.

Alternatively if you are now bankrupt can't you ask the OR for their advice in case they can pay for it if the chances of recovery are good and they stand to get some money back.

We were nearly in your situation at the beginning of this year with a business we were planning on buying that had been running for over 25 years. Fortunately for me I don't trust any one - including professionals whatsoever, and even though our accountant checked the books out of the business we were buying and the owners were over 80 and were planning on retiring, my accountant sent me a written report saying he had done a due diligence and it was a good business. I still checked what the accountant did and found lots of flaws and questions he should have asked the business sellers but didn't. Unbeknown to anyone, I also tracked the sales figures for the past six years and noticed the sales were dropping dramatically even though my accountant said it was a good business to buy. I pulled out a week before completion as the sales had dropped so low there was no profit in the business at all.

We bought a business a few years ago you see and ended up losing everything including our home within six months after buying it, despite paying a whole team of professionals to protect our interests before hand to ensure it was a good business to buy. We had the business for a few short months and subsequently discovered all the professionals involved had conspired to defraud us and had actually sold us a failing business. As much as the experience you are going through now is a very bitter one, you will get through it and learn loads that no book or person can ever teach you. You will get back on your feet again in time as well. Just make sure you look after yourself and don't punish yourself for what has happened.

www.ukbusinessforums.co.uk are very helpful. The business advice on there is first class.

Good luck.

devils_advocate

as I'm sure it you're aware by now, getting the correct answers to the wrong questions is never going to help you in business. It's being able to ask the right questions, and get the correct answers to those, which takes you further forward

So with this in mind, I'd ask the question of why you need a forensic accountant's report? What are the questions that this report is intended to answer? I ask this because, to my mind, a forensic accountant's report is designed to dig deep on a transactional basis, but from the information you have provided, I can't see that a transactional analysis is going to help you on your (presumed) case for negligence against the bank and accountant..

I appreciate that it is impossible to put all relevant facts a forum such as this, but if I were looking at this it suggests that the price is very high for a business with a turnover of £525K, although I suspect that some of this purchase price would be in respect of stock. Similarly, you mentioned "the difficult early stages of trading" but if the business is a fully going concern, the element of goodwill from the previous owners should have tided you over thesix-month period, and any fundamental problems should have emerged later.

so from this very limited information my suspicions would be that you have paid too much for the business and/or stock, and the implications of the completion balance statement of what you were actually acquiring were not properly explained to you.

On this basis, yes you would have a prima facie case for negligence against the accountants, but on the other hand these are such fundamental questions I find it difficult to imagine that they would not have covered then in their report to you, and whilst theirconclusions may not be the best, it is difficult to prove that they constitute negligence. Having said all this, I still can't see how a transactional analysis rather than an explanation of what exactly you were buying would help you.

One final point which I'm sure you've covered in your own mind, but is possibly worthwhile putting in a black and white for you to see. A solicitor who takes cases on a no win no fee basis is trying to make enough money from the one he wins to cover the costs of the ones he loses. He, therefore, is playing the averages whereas you are not going to get a blended percentage win out of this. your solicitor's appraisal of your chances of winning are from their percentage viewpoints. You have far more emotional energy tied up in this final throw of the dice.Please be aware of the temptation to grasp at straws as the investigation develops.

Pennywise

Firstly, don't pay for this forensic accountants report. Your "no win no fee" solicitor is probably pushing work towards their "preferred" accountancy firm and will no doubt get a kick back in return. If they are a decent firm of solicitors, they would pay this themselves and take it out of their "winnings". It sounds like you've picked a rogue firm of ambulance chasers.

Have they explained exactly to you why they claim to need such a report and have they explained to you exactly where they are at with the claim/complaint. By now they should have studied the terms of the contract between yourself and your bank, solicitor, accountant and the vendor. Whether you have a successful claim will depend on the terms of the contract/agreements with each party.

Did you actually engage your accountant/solicitor to do a due diligence report which is an indepth report and would be expected to find any problem areas. Or did you do what most buyers do and simply tell your accountant/solicitor you were buying the business and tell them to do the basic requirements? This is the crux of the matter. If you didn't have a specific instruction to your professional advisers to check out the business, then you don't have a claim against them.

If the turnover was a lot less than the historical accounts show, then you probably have a claim against the vendor for misrepresentation, especially if the accounts etc they showed you were fictitious or contained errors.

Your "no win no fee" people should have gone through all this first to determine exactly where a claim may lie. They don't need a £3k report to tell them these basics which are basically legal issues and nothing to do with accountancy.

Only when you know exactly where the claim lies, and who was to blame, can you even think about getting the forensic report to back up the claim. To be honest it sounds like your ambulance chaser doesn't really know what they're doing and there're trying to pass the job elsewhere (at your cost) for direction as to what to do next.

Why not go to a proper firm of solicitors specialising in this kind of commercial dispute?