ANDERSEN PLLC Andersen PLLCAttorneys

Advocating For Your Interests. Preserving Your Legacy.

What you are getting into with the business you want to buy?

Perhaps you have been considering buying an existing business and think you have finally found the one you want. Now is the time for due diligence.

There are several important items to consider before you sign on the dotted line. Here is a checklist of items that should be included in your pre-purchase research:

Reasons for the sale

Why is this business up for sale? Consider the legal structure, the working hours and the number of employees involved. You should consult with a lawyer about the value of assets and liabilities. Your lawyer should also review all documents to make sure there are no hidden clauses or liabilities that have not been disclosed.

Market research

What is the market for this company’s products or services? Work out a cash flow projection. Will you be able to make a profit? Perform a competitive analysis to see if it makes sense for you to purchase this business.

Key documents

Both your attorney and your accountant should look over income statements and tax returns for the past few years. General liability insurance should automatically cover the business for the first 90 days after you purchase it. After that, is there an existing policy you can update?

Equipment and systems

Examine equipment, business systems and the condition of the building if the seller owns it. Are any repairs needed? Will you have to update the computer system or buy any new equipment? Is any of this figured into the seller’s asking price?

Valuation

If you perform thorough due diligence, you should arrive at a proper valuation for the business to ensure you will not be paying more than you should. You and the seller should reach an agreement about the rate of payment and how payment should be made. Making this kind of purchase is an essential step in your chosen career. Your attorney can advise you and ensure that all legal documents are in order so that you can assume your new role as business owner with confidence.

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ANDERSEN PLLC
17015 N. Scottsdale Road, Suite 225
Scottsdale, AZ 85255

Phone: 480-900-3539
Fax: 480-265-9101
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