Priscilla Monahan the Business Broker tried to defraud me and my family. Suspicions arose immediately after we submitted a letter of intent to purchase a business that she was representing. Priscilla wanted us to commit to an extremely short 10 day due diligence window. Everyone I spoke to said this was highly unusual as a typical window is more like 60-90 days. We managed to negotiate a slightly longer window, but it was still very short.
We almost immediately became concerned about whether the business owner had been compliant with collecting and remitting sales tax to the state of Washington. Their response was farcical. First, I was told that the previous owner of the company hired a CPA that told them the business didn’t require sales tax. Then she sent me a letter of explanation from the owner that offered a really lousy explanation that defied logic. My own research was convincing me that they did in fact owe sales tax (and potentially A LOT). I confirmed this when I called the state of WA to ask questions, never mentioning the business.
This is when things got stranger. Priscilla referred me to a buyer’s broker who she said she would pay for out of her own commission. Our lawyer suspected this broker was “a plant” and was “likely offered to you to convince you to go along with the seller’s version of the deal”. It certainly seemed like this was what was happening. Meanwhile, the seller was refusing to work with the state and or a CPA. After much convincing, they agreed to escrow some funds in case the state came after me for back taxes. However, I was concerned that the amount they agreed to may not be enough. So I called the state again, not mentioning the name of the business, and asked them some questions that would help me determine how much in back taxes may be owed.
At this point, Priscilla freaked out and claimed I broke the NDA I signed. She should read her own NDA. It says “prior to finalizing an agreement to purchase a business, it is my responsibility to make an independent verification of all information.” The seller got spooked and pulled out of the deal.
Our CPA’s response when informing him of what happened was, “Wow. You caught them in a lie.” Our lawyer said, “significant sales tax liability makes a target company extremely toxic and can result in huge issues for the buyer. It can be like buying a nuclear waste dumping site. In literally every matter I have seen with this set of facts, the buyer eventually walked away.”
My suspicion is that Priscilla and the seller knew from the beginning about this and wanted to unload the nuclear waste dumping site of a company onto me and my family. Luckily we learned the truth before it was too late.