Are You Buying A Business?

Craig Weston Inspired Director

If you are contemplating buying a business, there are numerous matters to be considered.

The numbers:

• copies of financial accounts for the last 3 years 
• schedule of sales, on a monthly basis, for the last 3 years
• reasons for any large credit notes processed after 31st March
• trading terms for the business
• recent Debtors' Aged Analysis

People and Systems:

• If you are taking over employees, obtain:
• –  an organisation chart and all position statements
• –  all employment agreements
• –  a schedule of employees’ entitlements
• Is there a systems manual for the business? Is it current?

Who you deal with:

• customers' list
• suppliers' list

IP

• Details of patents, trademarks, trade secrets and intellectual property systems

What and Where:

• methodology for valuing stock
• a copy of the business' lease agreement. 

Check:

• option period
• reinstatement conditions (painting, new carpets etc)
• business uses permitted 
• can the lease be reassigned?

Other issues to be aware of:

• Never sign a contract until you have had legal and accounting advice
• Make sure you are buying the business in the appropriate entity
• Keep full records of everything that is said or given to you by the vendor or vendor's representative
• Do your own due diligence and check all the information supplied to you
• Is the location satisfactory for your business?
• If you would like a copy of our Guide to Buying a Business, please contact Craig Weston.

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Article Source: www.buyabiz.co.nz