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NEED ADVICE, Welcome you also need a lawyer

Good luck

NEED ADVICE, Do you know about SCORE?? SCORE is FREE and can help you

I agree that you need to do strict due diligence and were I you, I wouldn't even start that process without having an attorney who specializes in small business buys, a tax attorney or at the very least a CPA who specialized in corporations to go over previous years books, taxes and all corporate reports with me right there. Make sure the money trail truly reflects the business; and consider the future of this business.

As easy as it is to be excited by the prospect which sits before you, the attorney is going to ask you right off the top of his or her head where you expect to get the money to finance the deal and how you expect to pay for it? If the company isn't profitable now because the owner has been "winding down" and his regular customers have gone elsewhere, how on earth are you going to win them back? Manufacturing is notorious for maintaining contract work, so those customers, (even with the owner on board) may not be available to return to you for years...

Be aware of the very large pile of paperwork you may be stepping in...Do you have a business plan? Consider the value of the equipment... Are you going to need to update and improve any or all of it? How about the building? Has the facility been maintained adequately? Is the real estate wholly owned or leased? If leased, when is that lease up and what are the terms? What are the utility costs? How is the equipment for the utilities? How is the roof? Are there any warranties in place for any of these items? Who did the previous work and are they still in business to uphold their warranties?

You said yourself you haven't much money, and your credit is poor. This means you are going to have to

1) convince the owner that you are still a good risk (do you have the background to prove this? Why should he believe this if you have no money and poor credit?)

2) take on partners or venture capitalists (They are going to have to believe in you, your idea and they will want a piece of this pie...)

You say you have been in manufacturing, but in what capacity? Are you a tradesman? Assembler? Bookkeeper? Management? Foreman? Salesman? How does this prepare you to have your own shop? And what exactly do you want to get out of it? If you expect to get wealthy, and you have the owner for 2 years, you need to have exemplary trust in him as well, and he had better be able to back up his own claims. How is his health and committment to you and to this business? Are you going to be able to manage all the necessary functions of the shop? Who is going to do all of the above? What do you invision yourself doing?

These issues are going to take some work. There are probably dozens more questions I could throw at you... but I would bet that you can come up with many of those on your own.

Finally, if all of your questions are answered satisfactorily and you still feel the risk is worth the effort (and hopefully others out there will back me up on this), make sure that the buyout is based upon today's value of the operation. If you build up the business and then he takes it back over because you can't obtain financing at the end of this 2 year period; he brings in a dark horse, all you have done is spit into the wind and gotten it back in your face. The attorney will work with you to set it up in your best interest. You can do a lot to improve your creditworthiness in that 2 year time, so that would be another major part of this equation. You will NEVER prove to a bank that they should give you money if you can't put your own money where your mouth is. Prove that you are worth the risk and maybe you'll find the bank or venture capitalist you need to invest. Whatever you do, be very careful!