LIVE - Buying a Business? What You NEED to Know First with Chris Papin

In this live episode of 'Small Business and Dealmaking,' host David C. Barnett welcomes Chris Papin, a dual-licensed CPA and attorney from Oklahoma, to discuss the critical steps and common pitfalls when buying a business. Chris emphasizes that buying a business is not like purchasing a car—significant upfront investment in due diligence is essential to uncover hidden risks. He highlights how many buyers underestimate the complexity of legal, tax, and operational due diligence, often relying on verbal assurances instead of documented evidence. A major blind spot is misclassifying workers as independent contractors when state law requires supervision, which can lead to massive liability. Chris also stresses the importance of working with local counsel, as state laws vary significantly, and warns that closing a business doesn’t end financial obligations—wind-up costs like leases, severance, and regulatory compliance can persist for years. He shares real-world stories of buyers who walked away from deals after due diligence revealed unsustainable owner involvement or unmanageable risks, reinforcing that the buyer must be the quarterback of the process. The episode concludes with practical advice: allocate 30–90 days for due diligence, vet experts in advance, and never ignore gut feelings about people or deals. Key takeaways include: 1) Treat due diligence as a mandatory, not optional, step; 2) Never rely on verbal answers—demand documentation; 3) Understand that closing a business doesn’t end liabilities—wind-up costs can be substantial; 4) Use your due diligence to quantify risks and negotiate risk-sharing mechanisms like seller notes; 5) If you don’t have industry experience, partner with someone who does, but don’t expect your advisor to be your industry expert; 6) Avoid aggressive negotiation tactics that damage relationships, especially if you need transition support; 7) Trust your gut—unease about a person or deal is a red flag; 8) Build your team (legal, accounting, industry experts) before making an offer, not during due diligence.