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© Copyright 2002-2003. All rights reserved.
Page 49
How To Investigate Any Business Opportunity
The seller is interested in: 
·
   
The best possible price 
·
   
Getting his money 
·
   
Favorable tax treatment of gains from the sale 
·
   
Severing liability ties, past and future 
·
   
Avoiding contract terms and conditions that he may not be able to carry out. 
In contrast, the buyer is interested in: 
·
   
A good title at the lowest possible price 
·
   
Favorable payment terms 
·
   
A favorable tax basis for resale and depreciation purposes 
·
   
Warranty protection against false statements of the seller, inaccurate financial data, and undis-
closed or potential liabilities- 
·
   
An indemnification agreement and security deposit. 
The agreement reached by the parties, if they succeed in reaching one, will be the result of bargaining.
Depending on the relative bargaining position of the buyer and seller, the buy-sell contract may reflect
other compromise or capitulation.
Price
The central bargaining issue in the buy-sell transaction is price. Price is what is actually paid for a busi-
ness. Value, as distinguished from price, relates to what the business is worth. The decisions of the
buyer and seller as to how much to pay or take for each dollar of potential profit are a basis for bargain-
ing, but other factors affect the final price.
In the Regal Men's Store negotiations, Rombaugh was asking $100,000 for his business. Critser made
his own evaluation of the business and offered $66,000. After an extended period of negotiations, Crit-
ser and Rombaugh agreed on a purchase price of $84,000.
What determined the asking and offering prices? How did they finally arrive at the figure of $84,000?
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