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Should I buy a LPO from an Owner or an Agent?
Brokers who sell Post Offices can be segregated into those who specialise in them or not.
LPO Brokers will definately have a lot more listing than those who don’t specialise in them. On top of that they will have a lot more knowledge about the LPO industry and are able to provide a lot of useful information to those of you who are looking at LPOs for the first time.
Occassionally a LPO owner will sell their business direct to the public themselves by putting an ad in the local newspaper.
Who should you buy from then?
When you are buying a LPO, it is important that you have done your homework. Logic tell us that if you buy direct from the owner you will save a bit because the vendor is not paying any agents fees. However, the biggest risk in buying a post office is paying too much for it AND buying a business blind.
Typically, when you buy from an LPO broker they will present you with a profile of the business for sale. This profile contains a wealth of useful information because they do specialise in selling businesses. However, owners on the other hand may not have this knowledge and not provide all the necessary information at the first instance. This is why having it is crucial that you have an expert perform due diligence for you.
On the point of paying too much for a business. I have heard of a lot of stories where purchasers have paid too much where they have bought direct from the owners and from the agents. At the end of the day, the market value of a post office is what a willing buyer and a willing seller mutually agrees on.
It just emphasises even more the important part due diligence plays when buying a LPO.
Our philiosophy is to help prospective owners “buy a LPO with eyes wide open”. On numerous occassions we actually advise the client against buying the business because they are not in the financial position to afford one. Please contact us if you would like to know more about our due diligence services.
The LPO Advisor