Business Valuations or Purchase Due Diligence
- Are you thinking of purchasing a business?
- What questions should you ask the business owner?
- What do you want to look at on the financials or tax returns and why?
- What do you need to know before you sign on the bottom line?
- What do you need to know about the employees and payroll?
- How do you establishing the proper value of a small business? Many different elements go into the value of a business.
- The most common comment from individuals either purchasing or selling a business is putting the value of their business solely on the gross sales. Yes that matters but what also matters is the profitability of the business.
- Does the owner work for free? Is someone buying a minimum wage job?
- Is the business growing?
- Current owner assisting in the transition?
- What fixed assets are required to make the sales and what shape are they in?
- Is inventory an asset to buy or sell?
- How about employees? Any contracts with them?
- Any Contracts with others that need to be honored?
- Are their sales tax filings up to date?
These are just basic questions that need to be answered with additional detail and verifications required as parties to a deal discuss purchase/sale particulars.