Anyone have business experience...buying/selling a boutique???

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  1. Sorry this is SO LONG, but I need advice! Thank you in advance!

    I am in the process of negotiating to buy an existing high-end boutique in my area. It started a couple of months ago when the current owner approached me ( I work there). Her reasons were, "oh, I want to have another baby", and "I want to be a stay-at-home-mom", and "my husband is doing really good". I thought everything was going well with the transaction until they presented their asking price, which was about $100,000 more than the initial evaluation by my CPA.

    After about two weeks had passed, they started bugging us to make an offer. They hadn't even presented the financials for the company, profit & loss statements, tax obligations, debts, etc... When we asked for these documents, they became even more pushy.

    After my CPA looked over the documents, he concluded that they were over $100,000 in debt (on a credit card) with the store, and had an additional personal note out for $100,000. They also had about 7 outstanding debt accounts with vendors when I did a state debt search for their business name.

    So, we made an offer of an extremely generous amount considering what it's worth (per my CPA), and they refused, we countered, and they refused again. The husband is also demanding a HUGE down payment to "pay off the debts" which aren't my problem. They now are pushing for a number that I'm not going to pay. It's just not worth it. They continue to be extremely pushy, asking me to make the decision with a "verbal agreement" which I'm not comfortable with because my attorneys and cpa aren't done with the purchase agreement anyway.

    I am just really soured on this deal because they are so pushy (I think they are desperate for money to pay the debts), and the current owner (who wants to stay on as a consultant after) refuses to work right now. She will come in, turn on the lights, put the sign to "right back" and then leave for the rest of the day, and when I come in the next day, everything will be blaring just as though she was there 5 minutes ago. I just don't see how they are being that honest about this entire thing, when she can't even come to work (she'll lie and tell me she was there though).

    Also, I'm not even sure I want to be married to this business. I want to start trying for a baby soon and don't want to be preoccupied with the store. Her husband seems to think that I am going to agree to this number today. I just can't stand it when people are like this. How do I break it to them that I don't want to continue?

    Any advice would be appreciated!
  2. Why can't you just tell them that you are no longer interested. Say you cannot afford it, you have some sort of unexpected expense come like, like medical bills or something.

    Good luck!
  3. Is it possible for you to look for a new job elsewhere?
  4. That's part of the problem, they know I have the money and are just desperate to get out of their debt, so they are totally hounding me. I just wish I could post some of the emails this guy is sending me!

    I don't really even need the job, I work like 10 hours a week, so if I quit I'd just stay at home. They probably wouldnt quit bugging me though. They have said all along that "we have other interested parties" but it's just a load of crap... the Husband told my CPA that I'm his only lead (smart!), so maybe I should just throw that back in his face and say, "why don't you entertain some of your other leads while I think it over"??
  5. I think you have to be straight and say your no longer interested or (if you are) tell them the price they are asking is too high.
  6. If it's starting out badly...

    Trust your instincts, I think this is highly risky. Stick to your guns and your PAID advice and counsel. I smell a rat...
  7. Since you've been working there, is the store busy? Can you forsee the business growing? Does it have good traffic/customers? Are you REALLY interested in doing this business?
    I had 2 businesses before, NOT in fashion, and I can tell you that part of operating a successful business is some luck/good fortune, and rest hard work. I can tell you that a partner and I bought a sinking business and turned it into a success, IMO. One was not operated well before I took over so of course the CPA came with undesireable sales numbers. HOWEVER, I saw a potential in the store. It had great traffic and visibility. After I took over, it took a few years, but the store turned around, and sold the business at 5x the investment price. The second business I opened was from scratch, so it was harder to tell. It COULD have sunk, but you have to have the DRIVE. The business is never going to operatate itself if you just stock it and hire people. YOU have to have a VISION. You have to help the business get on its feet first before any real results.
  8. Wish you the best with your decision/business!
  9. Thanks, VivaNYC! I do believe this business is sinking only because the current owner is not willing to put in the face time. I mean, how good does it look to your customers when you haven't had any new stock in for 3 months? They walk in, and walk right out...muttering under their breath.

    She also has a huge problem with shopping and is unwilling to reinvest the profits into the business. I just know that her husband is trying to get the most money out of me to pay off her debt. I am also worried that the vendors won't work with her anymore as they send ALL packages COD. I have even seen settlement letters come across the fax machine, so she has an issue with spending the money in the wrong places, which worries me as the potential buyer. She has damaged vendor relationships and the name of the business.

    Here is what I wrote to him in response to his pushy email earlier:

    I just got off the phone with ***. He said he will be home tomorrow for
    approximately two hours to clear out emails, etc... He wanted me to stress that there is no rush to complete the transaction, as our attorneys and CPA are still going over things, and nothing can be completed until we speak with them.
    Please understand that this is all I can do until *** speaks with our
    attorneys. Please feel free to call him, he will return your voicemail, other
    than that he said he won't be able to do anything concrete until Monday.
    Also, as I said yesterday, I can go to NY any time, so if it's better for *HER*
    to wait until after Thanksgiving and/or the final agreement to go, that is fine
    with me.

    And here is his response:

    There is no need for you to go to New York twice. *HER* already has he ticket for the days discussed. She has been going crazy putting together this tight schedule, which is part of the process. Along with that comes ordering for spring this is a time sensitive issue and we will be getting the orders in just before the cut off. So for us and you there is a rush to complete or st least verbally confirm a number and leave it that. We want that number to be 83500k and you want it to be 70000 we need the 83500 and 40k in cash to deliver fee and clear. Can you do that number?

    Would this type of talking turn you off too? I am just very confused.

    I know it's not that much $ for an established business, but my CPA said it isn't even worth my offer of $70k... that's being very generous!!
  10. I would stick to my guns about the purchase price IF you think you want the business. If you are vacillating, I would tell them that you have reconsidered the purchase and that you want them to know in a timely manner so they can pursue other interested parties. Do NOT get guilted or pushed into the purchase of a business.
  11. I say go with your instincts - don't go along with the sale if you have a bad feeling about it.

    That being said, re-establishing relationships with vendors might not be as difficult as you think, especially when you notify them of a change in ownership. And if you do eventually purchase the business, please think twice about letting the former owner stay on as consultant.
  12. What does the $70K entail? Obviously no/minimal inventory in the boutique, right? The current owner's debts are his problem and should not push YOU to make a decision based on HIS needs. If I were selling the house, I would not keep badgering the potential buyer.. 'are you going to buy it? huh? huh? why you don't you give me what I ask for, huh? huh?' Tasteless. If you are going to purchase the boutique, make sure that the lease terms are in order. You don't want to buy to find out you have only 2 yrs remaining on the lease, only then to renegotiate with landlord.. prob increase in rent also. Also, you ARE paying $70k or whatever the asking price is, and so you need to make sure the current owner will LEAD YOU IN to the business with how to's and the proper connections. This is PART of the negotiations, unless you don't need his help at all. He sounds sketchy, IMO, but you are not buying HIS services, but just the boutique. Hope everything works out for you!!
  13. This is very important!

    I also agree with the others about TRUSTING YOUR INSTINCTS. I've learned to stay clear from people who put pressure on me and DH. The decisions we've made under pressure, for the most part, have always turned out wrong for me and DH. GL with your decisions.
  14. Im confused as to why you cant just tell them you are no longer interested.
    You sound like you really dont want the place, so dont buy it. Its pretty simple IMO.
  15. Thanks everyone! It is all blowing up in to a huge situation now... the husband of the owner is crazy.
    I am trusting my instincts, and they're screaming NO. It is very hard to say because I'm in too deep now. I may just give them an unreasonable offer and say "that's my offer, if you have better ones, please entertain them".

    The 70k includes her "consulting" which means turning over the client list, and training me how to buy, and working "two days a week". Also, the store is bare bones right now... hardly any inventory.

    I can't believe how out of hand this is getting, I thought it would be easy to negotiate with them because they seemed to have their lives together. I have realized now that they are just frauds who are super in debt and are desperate to sucker me in to buying this sinking ship.