Finding Office Premises & Reducing Purchase Price

loveandlight

We are in the process of buying a very small business that provides services to the legal profession. It has been running for 10 years. The client base is changing due to the new HIPS legislation. I know we are paying for a changing client base but felt confident that we would be able to bring in new business.A price has been agreed and we are at the stage of instructing solicitors. We have had a draft set of accounts for last year and will be sending our own accountant in to check through all the books and get certified accounts for the last three years as part of the due diligence process.

Out of the blue, yesterday afternoon, I received an email (this shocked me as why didn't someone care enough to pick up the phone and call us instead due to the time constraints of a week end) from the broker saying we have to find alternative office space as the office will be no more in a years time due to the area being regenerated. The sellers must have known about this for a while.

A major attraction for us to this business was its excellent location and dirt cheap rent. I am now thinking that it may no longer make good commercial sense to buy this business, if we end up having to pay substantially more in rent as well as move to a much less desirable location.

The sellers seem to be taking it all lightly and I get the impression from them that finding other offices is now our problem. I feel if they want to sell this business, (its already been on the market for 18mths), then the sellers should be doing what they can now to help us find alternative cheap office space if this deal is to still go ahead. Otherwise, if no-where else suitable can be found, we'll have to pull out of the deal as there'll be no profit margins left for us and theyll have to find somewhere else for themselves anyway. What do you think? Either that or face the prsopect of having to close down the business.

I also feel it fair and reasonable that the purchase price in view of now having to move offices in a few months time if the deal goes ahead, should be reduced. What do you think? I'm not trying to take advantage I just want to settle on a price that is fair and reasonable. We are already paying over the odds for their client base which has changed because of HIPS but because of my future plans, I'm hoping to be able to recoup this.

The offices are currently on a three month rolling licence and have been for the past 10 years.

Its taken months to get this far. I need all your objective thoughts about this. As much as my heart would like this business and I'll be devastated if the deal doesn't go ahead, I'm trying to maintain a level head about it all as I'll be even more devastated if we end up buying and then regretting it!!

Torby

not sure about the main question...someone smarter than me will come along soon...but as to why the broker sent you an email instead of phoning?

1: you can't argue
2: you can't discuss
3: he doesn't have to explain
4: he probably didn't have the b@ll$ to actually face you (well , on the phone at any rate)
5:no morals or scruples

you can make the list as long as you want , but you probably get my drift...the only other time I use email instead of phone is when there's specific information I have to impart...and I'm scare I might forget when talking to someone on the phone...I can pre draft and check what I want to send.

I think you might not get much success with the seller helping you to find new premises or adjust price etc...but I agree with you in what you say...they've been trying to sell for 18 months....if it was me selling, I would try and help....but I wouldn't necessarily do all the work...I would help...only to close the sale...but you may have yto face facts, the seller could just adopt the old adage...YP...your problem