Getting Paid

Getting Paid

I recently made a short presentation at Experts 4 Entrepreneurs about making sure customers pay what they owe. I had a lot of fun with it and thought it might be worthwhile to share here. I’ve embedded the PowerPoint slides below, but slides to my presentations often don’t tell the whole story, so here’s a little detail.

The presentation starts with an illustration about my not-so-pleasant experiences donating blood. (Apparently, my body needs all its blood.) How is that relevant to making sure you get paid? Because cash is a business’s life-blood. When customers don’t pay their invoices, they starve a business of a critical resource that it needs to stay healthy.

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Don’t Let the Seller’s Liens and Taxes Stalk You

stalking liabilities

“Leave the gun. Take the cannoli.” Fictional mobster Peter Clemenza delivers this famous line in The Godfather after a drive into the country with the godfather’s driver Pauli. The driver betrayed his boss and Clemenza has just meted out justice.

Take the good stuff. Leave the bad stuff. That’s the main idea behind buying a business via an asset purchase. Here are a few pointers so you won’t find yourself pursued by the Seller’s unpaid taxes and liens.

What’s an asset purchase?

There are innumerable ways to structure the purchase of a business, but most deals are either asset purchases or equity purchases. In an equity purchase, the buyer purchases the equity of a company (often referred to as the “target”) from its equity holders — stock in the case of a corporation and membership interests in the case of a limited liability company. The buyer ends up with the entire company, along with all of its assets and all of its liabilities. In a deal structured as an asset purchase, on the other hand, the buyer purchases the company’s assets but leaves the corporate entity behind, along with some or all of the company’s liabilities.

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Don’t Buy a Business Without Looking Under the Hood

looking under the hood

Before you buy a business be sure you’ve done your due diligence. Even in the days of Carfax, you wouldn’t buy a used car without looking under the hood to make sure the car’s in good condition. You’d probably also take it to a mechanic to have it examined by an expert. If you’d do this for a car purchase, why would you making a life-changing investment without making sure the business you’re buying is in good condition?

If you’re smart, you won’t.

You’ve probably heard the phrase caveat emptor — “buyer beware.” It means that it’s the buyer’s responsibility — not the seller’s — to ferret out issues that could affect whether the buyer wants to go through with the deal. The onus is on the buyer to ask questions and challenge assumptions.

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