[nosubstut]

A few points to consider:

- As an employee you have the benefit of already knowing what weaknesses the business has and if you are capable of correcting/improving them to increase profitability.
- It sounds like it is early in the process, however, your boss just shared his thoughts on pricing. Just a thought but if he has an idea of price, why is he paying his CPA and an appraiser to value the business?
- As stated by others it is probably in your best interest if he holds the note (assuming that he offers reasonable terms - this is another point of negotiation). If you were to borrow from a bank, chances are you would be required to pledge your house (if you own) as collateral.
- Carefully evaluate the appraiser's report. First, he is being paid by your boss and therefore could be expected to produce a report that is favorable to your boss (not necessarily the best interests of a buyer). It is likely the appraiser will use different methods to value the business and summarize his report with one concluding value. One method may simply be a multiple of gross sales - from a buyer's perspective, I would be skeptical about value derived from a sales multiple. While there are many schools of thought, the bottom line is that cash flow will repay your loan, not the level of sales. Can you run the business as efficiently as your boss? Or perhaps more efficiently? This will impact the level of profitability you can expect. Another method an appraiser will most likely use is an adjusted cash flow in which he will start with the net profit and add-back expenses that are discretionary or that a buyer might not have. For example, the business may pay for the owner's personal car, which is cash flow that would be available to a buyer.

You indicated that you perform many of the management responsibilities. Was the owner absentee? What duties did he perform? And can you absorb his duties? If not, will you need to hire someone? What would the salary be? (this would be an adjustment to the cash flow as well).

You say that the business has been around for ~ 20 years. How old is the major equipment (lifts, alignment equipment, etc.) This is an important consideration because if the equipment is old and getting towards the end of its useful life then the buyer could expect capital expenditures to replace old equipment (I wonder if the appraiser will disclose this). Similarly, what is the age/condition of the building? You also need to know what (if any) property/ assets are excluded from the sale.

Another issue to consider, how are hazardous materials (used oil, antifreeze, solvents, etc.) disposed of? Are there any environmental concerns - leaking hazardous waste drums on site, previous oil spills? You certainly don't want to take on responsibility for cleanup of any hazardous conditions created by a previous owner.

- As mentioned above, (I think it is worth repeating) I cannot think of any reason why you would want to structure the transaction as a stock acquisition - a contract whereby you purchase everything including assets, goodwill, liabilities; everything (most contracts will exclude some items, for example, cash). I strongly suggest that you have this structured as an asset acquisition.

- Do you have a lawyer who will represent you? Your attorney should ensure that the contract includes clauses like (among others):

- non-compete
- indemnification against liabilities from business activity prior to your purchase of the business
- transition assistance provided by the seller
- representations and warranties – you want the business transferred free and clear of all liens; any business loans and leases to be paid off.

I’m not an attorney, not offering legal advice…

Something else that is every bit as crucial for you to consider. What is your source of working capital?

Ultimately, you need to be comfortable that whatever the price is represents a fair investment for you. Use your knowledge of the business (9 yrs working there), your relationship with your boss (has he been honest and fair in the past? Even so, he is not a valuation expert and may not know what is a fair price other than what he is told. If not, I would not expect him to change now!) to evaluate the situation.

One final thought – how much (if any) contact have you had with customers? Is this something you are comfortable with and have the time to handle?

I’ve gone beyond what you asked for – if I can be of any help send a PM. Good luck.