Buying an existing business

Hi All

I'm looking to buy an existing business and I found one that I'm interested, it's a convenience store.
There are a few things I'm not sure in the due diligence
How do I know the figures are accurate? Must we audit that business? including the asset register, and financial statements, It seems like an overkill to do that, but otherwise how are we to know otherwise?

Would the seller be willing to give all these confidential information to a potential buyer that may or may not go ahead, or could be a competitor's spy trying to get insider information?

How do I know what to offer for the purchase price? Some advice from a "buying a business" article says we should never buy at the original asking price as there is always room for negotiation, just like properties, cars, etc.

The agent said that we need to make an offer first before the due diligence stage where we get access to the last few years of financial statements.
But I thought we need to do the due diligence/valuation first before knowing the real value of the business.

I asked a few business valuers/due dilligence it will cost $2500-$3500 to do that.
But I'm wondering what if after I pay this much and then it turns out that the numbers don't match..
What about the finance too, if I don't get approval?
I'll lose that initial due diligence cost and it's too much if it doesn't go ahead

Any advice?
Thanks

 

You have to understand from the business brokers perspective, providing everything without even getting an indication of what your offer might be is a waste of time. It be like spending countless hours with a "potential client" only for them to offer peanuts which the seller would never realistically accept. It's their way of weeding out the time wasters.

If you are serious, discuss a ballpark figure, sign a NDA and have a look over the financials they are happy to provide and see if they're worthwhile. Go to the business and try to learn as much at face value. These are easy to do elements of due diligence which you don't need to pay good money to do. You can even pay for a professional if you're relatively happy but not sure. If you're not happy don't sign to buy the business. If you are, negotiate and put pen to paper.

Due diligence when buying a business | Business Queensland

 

Thanks for your input. Good to know how the brokers think too.
As the buyer, I don't want to waste time too. And it's kind of like the chicken or egg problem.
Doing analysis takes time and effort too, and buying a business is not like buying peanuts too.. It's a big investment and risk, so I think that a careful and thorough analysis is important. My whole life's saving could be at risk if the business doesn't perform as expected or if I'm not a good enough to run it.

We finally we have negotiated on a price and paid a deposit so we are now in the due diligence stage, hopefully the figures all work out to proof that it's a good business for us.