Recently a client approached me and asked for my team’s insight into her acquisition of a group home. She told me it was literally offered to her for nothing; she simply had to assume the operations. As pre-sale auditors and brokers with considerable knowledge and experience in the group living arena I could understand why she approached us. So the first thing I told her is that I would like to see the following:
- Previous two, (2) years bank statements of the current operation – No seller created spreadsheet of the financials
- Lease on the home and something to indicate the current homeowner would allow her to enter into a lease of her own
- Claim numbers for all residents whose care was being reimbursed by no-fault benefits and each resident’s current case manager with current contact information
- The current corporation’s federal tax identification number (FEIN) and national provider identification, (NPI) number
- The buy-sell or asset transfer agreement so our staff attorney could review
I advised we would review the current operation and make a recommendation to her.
Immediately the supposed current owners rebuffed. In one conversation I was told the transfer of ownership agreement was prepared and ready for review. However, my client was told there was no need to waste time on such a document. My client was then told, after she advised of the items I requested that “I must not understand business.” This amplified when I asked why the current operators were so anxious to have my client discharge three, (3) current residents which is something they could have done themselves.
Of course, I do not know why these people were trying to unload a seemingly profitable group home, though unlicensed in SE Michigan. There are several possibilities. Who knows, maybe the largest flaw was a lack of clear communication. I just do not know.
What I do know is that it is not customary for a business owner to simply give away an alleged profitable enterprise. When I learned that my client had been added to their corporate documentation with the State of Michigan as the resident agent without her agreeing in writing for them to do so, I simply said: “Its your call, but for me there is too much unanswered.”
In the midst of it all the alleged seller became condescending, even referencing rumor to drag me down, perhaps angry I killed what she felt would have been a smooth deal to close. Of course when people go on the attack when under pressure, your antennas should stand up.
All of us embrace positive opportunity. However, that does not mean we should jump on every bandwagon that promises personal growth or income when the underlying circumstances leave too much to our curiosity.
Penny for your thoughts!!
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