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  • Business Financial Affairs
    • Get access to financial information.
    • Define what realty, goodwill, equipment and inventory are included in the sale.
    • Define what is the actual market price of the property.
    • Determine if it will be asset or stock purchase.
    • Research if any business obligations or debts will be inherited.
    • Learn business balance sheets and income statements for at least three years and for current year.
    • Study business tax returns for past three years.
    • Determine additional working capital that will be needed to keep business running after the sale.
  • Enterprise/Operational
    • Find out business history.
    • Get the information regarding business reputation, date when it was established, history of development, business ownership structure.
    • Get the copy of franchise agreement if it is used in business, learn franchise fee or a transfer fee have to be paid.
    • Determine whether upgrades are required as well as identify needed changes to business operations.
    • Get the copy of unsigned proposed buy/sell agreement Study proposed terms of the buy/sell transaction.
    • Investigate any business leases for equipment, property, etc and check whether these leases are transferable.
    • Research local laws to assure compliance.
    • Demand from seller an explanation of his/her reasons to sell the business.
    • Determine if you will be able to continue using of the enterprise’s business name, patents, trademarks, trade secrets, product names and any other proprietary information.
    • Research any licenses that may be required to maintain business operations and check the costs.
    • Determine whether or not the seller will offer a non-compete agreement after transfer of ownership.
    • Determine if there are any customer product warranties issued by the company that may be future obligations.
  • Personnel Information
    • Learn the company staffing requirements/policy and key employees.
    • Analyze the roles and salaries of all employees in the business.
    • Research existing employee contracts and benefit packages.
    • Determine the likelihood that existing employees will stay with the business after the transfer of ownership.
  • Market and Industry Information
    • Identify the products/services the firm provides.
    • Acquire a list of competitors, suppliers, and clients/customers, if possible.
    • Determine the market area of the business and method of distribution.
    • Research the industry.

Buying a Business Checklist
  Jake R Brady

on December 25, 2011

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