Guide Buying a Business First Contact
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First Contact The seller is probably disorganized, and dragging information out of him or her in conversation will be terribly time-consuming. So you need to present the seller with two lists. List 1 Preliminary Documents This is a list of all the preliminary documents you will want to review: Lease Agreements Balance Sheets and Income Statements – 3 years Income Tax Returns – 3 years List of Equipment, Fixtures, Furniture Contracts Business Agreements Employment Agreements Licensing Agreements All State and Federal Licenses Equipment Lease Software Licenses Proof of Ownership for Custom-Developed Software (see Software note) List of Key Employees (You need to be very careful when asking for this information) List 2. Interview Questions This is a list of preliminary questions that you should ask the seller before your first meeting. You may want to send the list to the seller, because you want your first meeting to be productive and definitive. You should have a clear sense of whether you wish to continue with this acquisition after the first meeting is completed. After reviewing the documents and answers to your questions, you need to step back and consider what other relevant information you need to request. 1. What is your corporation’s legal name?___________________________ 2. What is your relationship to the corporation?_____________________ 3. Tax status: C S Other__________ 4. Type of business: Retail Wholesale 5. Product__________________ Service__________________ 6. Do you have brochures?___________________________ 7. Describe your products and services: __________________ 8. Number of employees: Full-time _______ Part-time _______ 9. Why do you want to sell the business?_____________________ 10. Do you have family members who work in the business?__________ 11. Litigation: Current ______________ Past ______________ 12. Customers: Diversity ________________________________ 13. Who does your accounting? ________________________________ 14. Business mix: ________________________________ 15. Financials: ________________________________ 16. Number of competitors: _______________ 17. Suppliers: __________________ Chief supplier: ________________ 18. What makes your business different than your competitors? __________________ 19. Pricing matrix: ________________________________ 20. Management team: ________________________________ 21. Banking relationships: ________________________________ 22. Staying competitive: ________________________________ 23. Principal problems:________________________________ 24. Growth over last four years: ________________________________ 25. Licenses required: ________________________________ 26. Government regulations: ______________________________ 27. Shareholders: _____________________________________ 28. Marketing and advertising: __________________________ 29. Patents/technologies: __________________________ 30. Is the industry growing or contracting? ___________________ 31. Is there a future for this industry? ___________________ 32. Will the owner stay? ________________________________ 33. Will the owner take back paper? ________________________ 34. What were the prior year’s earnings (corp.)? ____________________ 35. What did the owner earn? ____________________________ 36. What is the asset risk?______________________________ 37. What do you think the business is worth?________________ Why?________________________ |