Like bigburtchino just said...it's something a lot of people who are new at buying business over look. NEVER sign the documents without a clause to hold the previous owner responsible for things that might arise in the next 12-18 months. Do you research...how much bad blood has this seller left behind. Call around to yards, buyers, sellers, etc...and ask about them. If you get "I sure an sorry X is selling, I hope the new owner can do as good of a job with the level of service" etc... or do you get "Either way I'll never do business with XXX, even if Donald Trump owned it."
Look at it not as a potential purchaser of the business but do you research as a potential customer of the business.
As far as inventory. I would knock 20-30% off the price of what he/she quoted the inventory...it's ALWAYS going to be worth more to the owner because they want top dollar, but realistically you aren't going to get it as a seller. Have an accountant go over the books for the past 3-5 years.
If you have the money have someone look at it professionally who can go back and project profits as well as ways it can be improved. A lot of current and new business owners underestimate the experience and knowledge of a business consultant who has no tie to the business that can give you a straight forward answer....and last but not least. DO NOT, DO NOT, DO NOT!!!!! Allow your want of the company start to rationalize the negatives of the company you are trying to buy. EVERY aspect of the company has a $ amount. If it has negative income then walk away. Unless it's something the old owner did that was just a waste and could be turned positive.
There are so many things to go over and it's 12am where I am, but the best advice I can say is leave emotion out of it. Be cold, calculating, and meticulous about everything down to the cost of pens needed to be purchased. I've purchased 7 companies that I've flipped or tore apart. It's about $$$ plain and simple. Emotion should NEVER be involved!!!
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