I am in process of buying a trucking company and finding out after due
diligence and along the process after four months, seller has
misrepresented in many areas: about one-third the profits claimed for
2003 and 2004 YTD, generated only half of projected revenues for 2004,
etc.

Seller?s business broker, in the meantime has posted a new ad on
Internet claiming even more inflated numbers while my exclusivity LOI
is in affect.  In addition, Seller is not honoring what were agreed
upon in emails (examples: changing the amount for down payment, taking
some office equipment out of the original list to stay with the
business, etc.)  Do emails constitute as legal documents?

Since the seller is refinancing most of the sale price (no bank
involved), he is insisting on a condition that if I fall behind two
months in payments to him or any outstanding debts to several financing
companies for trucks (which I am assuming with seller backing on them)
he takes back the entire company regardless of remaining balance in
any time/stage of the eight-year term.  We don?t have a signed sale
agreement contract yet although I have several marked up copies by
seller going back and forth between my lawyer and seller.  Seller does
not reveal his attorney or want us no direct contact although I made
no secret of my attorney.

My question is that I smell trouble with this deal and what legal
recourses I have in claiming expenses (accountant, lawyer and my own)
and loss of opportunity income for the past four months.

I'm not an expert but would like to weigh in here. I too just looked
at a business at spent some $$ to see if it was viable.  Be glad you
are finding out now about this unsrupolous (Sp?) character instead of
later.  He obviously doesn't have exclusive contracts so go after his
routes.  You'd be better off without him, especially if he has been
lying.  What you have is money spent on due diligence. You probably
wouldn't be able to recover any expenses from this.  Consider it a
great investment.

This is not legal advice, but get out while you still can.  Trust your senses.

Would it be that you work for, or once worked for the seller ?

I agree with the others, cut your losses, and walk away.

The deal sounds pretty dubious without the vendor's antics.

It also sounds likely that you have learnt enough to 'clone' the
business and set up in competition.

I know of a few smallish businesses that have been 'handed over' to
long term employees - but those were on generous and friendly terms.

Smell trouble? I can taste it in the air.

* Guy won't reveal his lawyer's name. That's inexcusable, when dealing
with legal documents. I doubt he has anyone with a law license
advising him on this claptrap of a deal.
* Guy insists on return of the property if you miss a payment,
regardless of how far you are along on the payments. Also inexcusable,
and a violation of basic accounting. There's no reason for such a
provision unless he plans to ensure that you default (ie. shredding
your payment and saying he never received it, etc.), move into the
building while you're out, and begin operating the business for his
own profit while continuing to dun you for the payments. While you
contest this idiocy in court, he operates the business and steals the
customers.
* Guy lied about the business's finances. That alone is enough to blow
the deal in my mind.
* Guy reneged on his exclusivity agreement. Hard to trust that he'll
honor any other part of the deal. (And yes, e-mails are legal
documents. Just ask former telecom analyst Paul Quattrone.)

No wonder this man wants to finance the deal himself. No bank would touch it.

Get out now. Basically, this deal protects the seller, offers you
little protection, and leaves you at the mercy of a man who has
already demonstrated a disregard for contracts.

Eat the cost and blow this joint before it falls on you.

As for whether you can claim losses, I'd be very surprised if you
could do it outside of a lengthy and protracted lawsuit, in which his
lawyer (at least at that point you'd know who it is!) would attack
your lawyer for not seeing the holes in the deal. I don't know whether
the time and expense of a lawsuit is worth it, relative to your
losses. I will say that collecting opportunity costs is very difficult
to do, though a consultation with a lawyer would get you a firmer
answer than that.

My advice: Don't depend on an answer site for the answer to this
question. I can speculate, and I know a bit about how the legal system
works, but I'm not a lawyer. Even if I was a lawyer, you don't know
what I know about contracts or whether I graduated last in my class
and took eight years to pass the bar exam. I suggest you talk to a
lawyer specializing in contracts. Pay the guy his hourly rate and get
a legal opinion you can, literally, take to court.

V

Thank you for your helpful comments. I never met the seller until
little over 3 months ago.  I also learned that seller had dumped
previous buyer prospect because he was asking to guarantee minimum
income.  Seller (in mid 30's)is allegedly sick with cancer and
therefore, extremely motivated to sell with 7% down for little over
$1MM deal with lots of equipment, financed the deal by him with low
interest and long term.  The catch, which was last minute imposed, is
you miss 2 payments and he takes the whole company back, no
exceptions--in addition to all big lies on income and profits.
What bothers me is if i walk away form it without taking any legal
actions, he and his unscrupulous broker will just find another sucker.

Hmm.. not exactly the setup I suspected

But it still stinks.

Funny that someone with cancer should be putting together a fairly
long term deal, one would expect them to be tidying things up rather
than setting up a vulture opportunity.