Morné Kruger's story
"We looked into buying into a well-known coffee franchise here in Australia. We approached our accountant and presented the financials to him and he said that everything looked in order. He did suggest that we do a due diligence if we don’t have peace about the financials.
We requested the last 3 years financials from the franchisor and cross checked it with the financials provided to us. The numbers stacked up and we felt that that was sufficient evidence for us to proceed with the purchase of the business and did not do a due diligence.
After three months of trading we realised the turnover was good, but we were not making any profit. It turned out the previous owner had family members in his employ who was not paid out of the business.
The lesson we learned from this experience was that we would have noticed something was wrong should we have invested in a company like Quasar Advisory to do a proper due diligence of the business.