LeBaron Bonney Co.

[Karl]

Originally Posted by BRENT in 10-uh-C

There is some truth in this however there is often another side in this from what I hear in seminars, --that while it is unethical and illegal, it happens WAY too often in business sales in that the books are 'cooked' to represent an inflated P&L.


While many will be quick to say that this is fraud and rarely done, nothing could be further from the truth regarding the 'rarely done' part from what my banker and CPA tell me. Sometimes it can be found beforehand thru a full-audit however someone who is shrewd with the books can make this virtually undetectable until well after the sale has been consummated. Even when it has been discovered, an undercapitalized company generally does not have the funding to contest this in court. I would be interested to hear what Bill Underwood says in his experience with this type thing.

It happens lots -When I was buying my practice I learned very quickly not to believe the figures I was given. Turn over looks great if you are banking your own checks . I always used to just ask for the appointment book -Interestingly some guys were seeing 5 patients a day and putting through enough cash to have seen 60. You do get the other situation where the owners have a profitable business which they siphon cash out of into their back pocket. All good until Uncle Sam catches them or they try to sell their business (sometimes both at the same time) The books, of course, look dreadful and they wonder why they can't sell -Karl