You have been looking for various businesses for sale and now you have actually found that best business to purchase. Business is represented by a reliable broker. You are comfortable with the terms, and now you wish to participate in contract and continue with the due diligence stage. Whatever you have been informed by the seller and broker sounds good and feels right. So whats next? How deep do you require to dig?
Deep my good friend. Yes, a lot of brokers are very respectable. However remember they only make money when the offer closes. And remember also that the broker is representing the seller, not you.
So what should you be digging for? Here is a partial list:
1) Negative company patterns;
2) Negative market patterns;
3) Anticipated however concealed competitors;
4) Any tip of a personal matter that would restrict the seller from selling;
5) Any partner, spouse, shareholder, or related party that would restrict the seller from selling;
6) Existing or past credit problems with banks or suppliers;
7) Any pending litigation versus the business;
8) Any claims, liens, or encumbrances against the business or business real estate;
9) Unpaid earnings, sales, FICA, joblessness insurance coverage, or other taxes;
10) Prompt filing of all tax returns;
11) Expected but undisclosed loss of one or more significant accounts;
12) A current catastrophe healing strategy;
13) A present management succession plan;
14) Stale or nonexistent policies and manuals (consisting of personnel manual, training handbook, safety manual, and sexual harassment policy).
15) Retention of crucial employees;.
16) Retention of crucial accounts;.
17) Recent bad promotion;.
18) Expiring/ renewal of home lease;.
19) Leases that are not assignable;.
20) Constraints on company or home growth;.
21) Capital properties that are at or near their anticipated life;.
22) An established reserve for capital improvements;.
23) Obsolete equipment and machinery;.
24) Overvalued inventory;.
25) Product obsolescence;.
26) Expiring licenses, patents, franchise arrangements, etc.
27) Difficulty in acquiring basic materials, products, or services;.
28) Expiring supplier or provider agreements;.
29) Recent increases in all kinds of insurance rates;.
30) Staff member awareness regarding business sale;.
31) Customer awareness concerning the business sale;.
32) Supplier and supplier awareness regarding business sale;.
33) Non compliance with safety and ecological https://www.bs2t.net requirements;.
34) Potential labor union or other worker associated concerns;.
35) Any website related issues.
As you can see there are numerous concerns that really require to be examined. Many are very technical. You will likely require to enlist the assistance of other specialists for support. A lawyer and an accountant are a must.
Simply keep in mind, when you are searching companies for sale, plan ahead. Do not rely on whatever the broker and seller inform you. You are making a big choice; make sure its a good one.