Paillote Posted February 23, 2004 Report Share Posted February 23, 2004 I guess I enter sensitive territory by questioning the merits of the sponsor, but if the guy is clean, I guess it will only be to their credit. The company in question is of course Sunbelt Asia. I subscribe to their newsletter were they announce Thai businesses for sale. I believe in the rule that if something sounds too good to be true; it is just that, not true. Some of the business offers comes with almost outrageous earnings to cost ratios. The most recent newsletter offers a discothèque with millions worth of inventory and profits of 40 million per year for sale for 70 millions. Quite a good offer I would say. Anyway, I don't write this post to discuss this particular business. It was just an example of what is offered. The only business that I ever was able to positively identify was when the now run-away manager of financial disasters 'Warblers' and 'Titty Twister' tried to sell his business through Sunbelt. Those bars where offered for a substantial amount of money, and described as virtual money machines, packed every night with millions in profits. So what is the broker's role in this? Are they purely a front-end for potentially unscrupulous business operators, or do a business sold through Sunbelt Asia actually mean that the financial claims have validity? And if the numbers are correct, what about expired licenses, zoning and other issues that will potentially make future business into a disaster? I guess a broker in the west would be liable for legal action if they sell a business on false promises or hides important information, here in Thailand I just don't know? Paillote Link to comment Share on other sites More sharing options...
khunsanuk Posted February 23, 2004 Report Share Posted February 23, 2004 Hi, Okay, while I have no idea about the business practices of Sunbelt Asia, I do know the man behind it and have always considered him a decent guy. Also, if I thought that a sponsor of this site was not legit, they would not be a sponsor. Sanuk! Link to comment Share on other sites More sharing options...
Paillote Posted February 23, 2004 Author Report Share Posted February 23, 2004 khunsanuk said:Hi, Okay, while I have no idea about the business practices of Sunbelt Asia, I do know the man behind it and have always considered him a decent guy. Also, if I thought that a sponsor of this site was not legit, they would not be a sponsor. Sanuk! Sorry, wrote this in a way that makes like I am somewhat accusing Sunbelt Asia of poor practice. That was not the intention. Just trying to find out how much substance there are in the finacial claims of businesses on offer. Guess the claims are revised by Sunbelt, but then again, the mentioned example makes me sceptic. Paillote Link to comment Share on other sites More sharing options...
khunsanuk Posted February 23, 2004 Report Share Posted February 23, 2004 Hi, Hey, no problem. Not accusing you of anything, nor do I have a problem with your post. Sanuk! Link to comment Share on other sites More sharing options...
SingaporeSteve Posted February 24, 2004 Report Share Posted February 24, 2004 Im not springing to Sunbelts defence and I am sure they are capable of doing that themselves. However, from what I have seen in Thailand business seem to sell at two kinds of prices, either rock bottom or sky high. Rock bottom when the owner needs/wants to get out quick for some reason (which seemingly is often health or moving abroad related). Sky high when they are really just testing the water and if someone buys at their price, they will sell otherwise they keep going. If you took the disco scenario, perhaps the owner thinks its going to go downhill and wants to get out quick and thus has priced it accordingly. May not be anything dramatically wrong in the factual information presented to and provided by Sunbelt but dont forget thats what has gone on in the past. Its up to you to determine what will/could happen in the future if you bought it. Just a couple of points of caution. The multinational company I worked for bought a business here in Thailand, nothing to do with nightlife for around 1,000,000 US$. 50% of the purchase price was dependant upon continuing profits being derived. They were ripped off and ended up writing off over 1,000,000 US$ in bad debts, inaccurate reporting etc and this is even having due dilligence undertaken by one of the big 4 accounting firms which was very extensive and cost a heap of money (well it did not actually as we refused to pay for their errors). Of course we did not pay the additional 50% to the former owner but it cost a fortune in legal fee's. Now having my own business I am staggered at what is considered acceptable financial reporting and then approved by an auditor. It seems standard practice to lower your sales and expenses to avoid taxes. I dont think Hans Christian Anderson could have written better fiction than some of the balance sheets I have seen. I am still trying to find exactly where tea money goes into a balance sheet !!! Of course if you were to proceed buying through a broker, I would suspect that there is minimal protection in law however its likely to be better than trying to go it alone and find/buy something. I would hazzard a guess that they dont want their name associatted with any real problem businesses. In a nutshell you have to be very cautious indeed. Cheers Link to comment Share on other sites More sharing options...
spirit_of_town_hall Posted February 24, 2004 Report Share Posted February 24, 2004 Reducing a companies earnings and increasing expenses and work in progress happens the world over. There is little the auditor can really pick up if the company is determined to misrepresent its accounts. STH Link to comment Share on other sites More sharing options...
SingaporeSteve Posted February 24, 2004 Report Share Posted February 24, 2004 This is not just inflating expenses, one auditor advised me to 'lose' a heap of expenses so that the profit figure would keep the tax people happy !!! "Khun SS, your expenses are too high - Lets just not put them in the balance sheet for all these things " - Frightening and suffice to say they are in and properly represented. Cheers Link to comment Share on other sites More sharing options...
Guest Posted February 24, 2004 Report Share Posted February 24, 2004 Sorry can't log in under Sunbelt Asia so will post under this nick. Thank you for your e-mail. We indeed use Western customs as we are part of Sunbelt, the Worlds largest business brokerage with 389 offices. www.sunbeltnetwork.com We are always judged by our buyers and sellers on the job that we do. This is one of e-mails we received in fact several weeks ago. In fact the other buyer?s partners from Europe were here today to invest as well. SUBJECT: Thank you for your assistance Dear Greg, Few weeks after the successful acquisition of our beach resort, I would like to thank you, your wife and your team for your professional assistance in making this happen. We especially appreciated your help during the negotiation phase, which is often difficult for both parties. Your neutral position in the middle, always keeping in mind to make the deal happen to the benefits of both parties was a great help and reassured both parties to do the right thing. Both my partner and I are very happy about our acquisition, and we are also pleased to see our friends get enthusiastic when they come to visit the resort. Best regards, If you had ever come to our office, you would have had to read and approve the following before even getting the address and name of the business? Excerpt from the Memo record of showing? Buyer further acknowledges that all information and materials on each business opportunity provided by Sunbelt have been provided to Sunbelt by the seller of the business. The seller believes the information to be true and accurate; however, accuracy is not guaranteed and all information should not be construed complete. While statements may be presented concerning a matter of opinion, whether or not so identified, these are only statements of opinion. Sunbelt makes no representations or warranties, expressed or implied, regarding the information provided to Buyer. All information provided to the Buyer is for confidential use and is to be used solely for the purpose of evaluating a business opportunity as a potential buyer. Excerpt from the Buyer Disclosure? Counsel Disclosure Buyers are advised to seek counsel from an attorney, Certified Public Accountant and any other parties necessary to make an informed decision regarding the purchase of any business opportunity bought or sold through Sunbelt Business Brokers. Initial:_________ Risk Disclosure Business opportunities by their very nature carry risk. Some of these risks include obsolescence or reduced demand for service or product, regulatory laws, ineffective management, changes in the local or national economic condition, and many others. Due to the risks inherent in business opportunities, a buyer could incur a loss, including but not limited to their entire investment. Buyer acknowledges that they understand these risks and that Sunbelt Business Brokers cannot and does not in any way warrant or guaranty the future vitality or prospects of any business. Initial:_________ From the confidentiality agreement? 1. DISCLAIMER OF CONSULTANT?S LIABILITY AND BUYER?S RESPONSIBILITY: When a ?Consultant? takes a business to market they receive information about the business from the seller, usually including but not limited to tax returns, financial statements, equipment lists and facilities leases. Buyer understands that the ?Consultant? does not audit or verify any information given to Sunbelt or make any warranty or representation as to its accuracy or completeness, nor in any way guarantee future business performance. Buyer is solely responsible to examine and investigate the business, its assets, liabilities, financial statements, tax to establish the price Buyer is willing to pay. Any decision by Buyer to purchase the Business shall be based solely on Buyer?s own investigation and that of Buyer?s legal, tax and other advisors. Buyer expressly releases, discharges, and holds harmless Sunbelt from any and all responsibility and/or liability in connection with the integrity of such information or for any action Buyer may take with regard to any business and Buyer accepts sole and final responsibility for the evaluation of such information or material or physical or other assets or price of the Business weather furnished by consultant or by Seller or Seller?s representatives and Buyer further hereby accepts sole and final responsibility for any price offers made by Buyer. Only after approving the above would you get the business information. After you had gone to the business by yourself. If you were interested in more information and you called us. A meeting would be arranged with the Seller where you could ask all the questions you wanted. If you did not like it, you never hear from Sunbelt Asia again unless you initiate contact. We believe in zero pressure or "selling." We wait for your call. If however you had wanted to go to the next step and the meeting with the Seller went well, you then could put an offer to purchase with conditions. If the meeting did not go well or you became cold on investing then you would never hear from us again unless you initiate contact with us. Again we wait for your call. If the offer is accepted with conditions or counter offered and then accepted. The fun starts.. Now `beings the due diligence on your part either by your attorney or accountant and yourself to review ownership, negotiate lease terms with the landlord, review the financials and approve them and any other conditions you may have such as no liens on the equipment . Sunbelt Asia will help with obtaining documents from the Seller on your behalf or negotiate terms both parties are happy with. We are always trying to help you or your reps get your conditions met and keeping the emotions of both parties under control. If the conditions are not met, the business transfer is off. You never hear from us again unless you imitate contact. Again zero pressure from us. If they are met and you are comfortable, then you go to closing. At the closing, you will need to read and approve the following? Purchaser and Seller hereby acknowledge that in view of the important legal and financial aspects and the complexity of the proposed purchase/sale of the business known as ??, they were advised by Sunbelt Asia Co., Ltd, ?Broker?, to obtain the appropriate counsel form legal, accounting and other professionals concerning the sale/purchase. Purchaser and Seller each acknowledge that Broker, nor any of Broker?s agents, employees, officers, directors, shareholders, co-brokers, independent contractors and affiliates (?Broker Group?) made any representations or warranties regarding any fact regarding the business/stock being sold, any legal issues, aspect or ramification connected with the proposed purchase/sale, or any representation or warranty to either Purchaser or Seller concerning the financial condition, or any matter relating to either party. Broker Group has made no independent investigation or verification of any representation, warranty, document, or piece of information presented by either party. Each party has either done their own, independent investigation with respect to such items, or was advised by Broker Group to do so. Broker Group is hereby released, indemnified and held harmless by Seller and/or Purchaser from and against any and all claims and damages of every kind attributable to the performance or non-performance of Seller and/or Purchaser under any agreement connected with the sale/purchase of the business /stock described above., Broker Group shall not be liable or responsible for, and are hereby indemnified and held harmless by Seller and/or Purchaser from and against any and all claims and damages of any kind relating to the above-referenced sale/purchase. Both parties agree that Sunbelt Asia Co., Ltd. has fulfilled Sunbelt Business Brokers primary brokerage function concerning the sale/purchase. After the closing, you will hear from us. :-) Any problems either the Buyer or Seller may have, we are always there to help. As for the Seller before the process even begins on the Listing agreement, they state ? Annual Gross? Seller must prove, Annual Cash Flow? Seller must prove. If the Seller is a partnership, corporation, or other entity, the person(s) signing on behalf of such entity hereby represent(s) and warrant(s) that he/she is, or they have the authority to enter into this contract on behalf of said entity. Even though Santos had approved and signed the listing. He was a long way from getting a Satang. When it became clear that indeed their was perhaps some funny business going on, we pulled the listing. If my memory serves me correctly it was 2 or 3 days after getting the listing. By the way, the Disco you pointed indeed looks very good on the surface. Its in the Zone and is quite big. They have 200 employees. Due diligence will bear out the truth. Any other questions, I'm happy to answer. Link to comment Share on other sites More sharing options...
.. Posted February 24, 2004 Report Share Posted February 24, 2004 "By the way, the Disco you pointed indeed looks very good on the surface. Its in the Zone and is quite big. They have 200 employees. Due diligence will bear out the truth." AND "When...takes a business to market they receive information about the business from the seller, usually including but not limited to tax returns, financial statements, equipment lists and facilities leases. Buyer understands that <Sunbelt Asia> does not audit or verify any information given to <Sunbelt Asia> or make any warranty or representation as to its accuracy or completeness" Those statements from the "horse's mouth" give you your answer. Sunbelt is *nothing* more than a advertiser. Sunbelt spits back only what the seller's give them and leaves due dilligance up to you (i.e., thay make the introduction ONLY -- everything else is up to you). Form your own conclusions about the ethics/validity of this business practice and what that service is worth. Not for me to say... Cheers, SD Link to comment Share on other sites More sharing options...
iono Posted February 24, 2004 Report Share Posted February 24, 2004 suadum said: Those statements from the "horse's mouth" give you your answer. Sunbelt is *nothing* more than a advertiser. Sunbelt spits back only what the seller's give them and leaves due dilligance up to you (i.e., thay make the introduction ONLY -- everything else is up to you). Form your own conclusions about the ethics/validity of this business practice and what that service is worth. Not for me to say... That's interesting as I periodically check out the site for a possible purchase in a couple of years, a nice small biz with an apartment/shop house. Now knowing they don't do the due diligence, but only advertise puts a different light on some of the businesses offered for sale. :: Link to comment Share on other sites More sharing options...
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