- if things go wrong, are such documented agreements enforceable by law ?
- Ask to see audited accounts (or at least some prepared by an accountant if the business is audit exempt) for the business: Also, 6 months bank statements and up-to-date management accounts. Any loan provider would ask for these, so why not you. If these are not forthcoming, walk away. If they are not willing to share these with you, there is something to hide.
A guy like that won't have audited accounts. Management accounts etc won't be worth the paper they're written on.
A bit presumptuous, no? All we know is it's a small business. Anyway, my suggestion was to ask for them: whether or not they exist and the state they're in tells its own story. They can of course be complete works of fiction, hence the suggestion to look for bank statements too. If they don't exist or look dubious a good excuse to say no, as the risk gets into the stratosphere.....
If this guy has spent money on elaborate management accounts while at the same time carrying large legacy debts, the question of priorities arises, most specifically in the form of a suspicion that the purpose of procuring such accounts was to prime the business for sale or outside investment.
I'd feel very exposed if I couldn't get a very accurate picture at any time I wanted of cash within and owed to/from the business.
Hi @MrEarl
Is the business as a sole trader, or a ltd company?
What good is recourse to law to enforce a debt that he won't be able to pay if he hasn't any money?
....A friend in need of cash is a friend you don't need.
Hi Mr Earl,
Would you be better off investing in the business?
Gordon
What age is the guy and will he eventually get an inheritance (family home perhaps) ? This would be the way I'd be thinking in the long run.
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