Passing Financial Due Diligence in a Business Sale
Due Diligence is the final hurdle of the business sale process. While there are many aspects of the business that will be explored by the buyer, such as as personnel, operational, market, and legal, it is financial due diligence that is one of the biggest reasons deals fall apart.
The more expeditiously that clear, organized information that demonstrates the full financial benefits of owning the business can be made available to a prospective buyer, the more likely the business will sell as negotiated and close on time. With that in mind, the following are individual items that may be requested by a prospective buyer to substantiate the financial aspects of the business.
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Buying a Business with a Partner? Plan Ahead
"A friendship founded on business is a good deal better than a business founded on friendship." - John D. Rockefeller
For a variety of good reasons people partner up to purchase a business, whether it be one partner contributing the funds and the other putting in the time and knowledge or both simply deciding to split up the responsibilities. Sometimes one person may not have all necessary skills to operate a business and needs a partner or a team to round out the required talent roster. As long as ample forethought and planning goes into the formation of a partnership it can, indeed, be a great way to achieve a business acquisition. Since partners are liable for the business activities of the other, and a partnership is typically much easier to get into than to get out of, you'll want to achieve mutual clarity upfront. Engage a good business attorney to draft legal documents that are specifically tailored to your business circumstances. You may wish to discuss the following two documents with your attorney: Read Entire Article
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Sold! Dickinson BBQ Company - A Testimonial The CBB Team takes great pride in providing personalized, professional service to each of our clients and it is always gratifying when we receive testimonials. So, we thought we'd share. CBB Broker, Doug Ashby, received this letter from the owner of a business which he listed and successfully sold. Great job Doug! |
Ask the experts section
Q: Do you use rules of thumb when valuing a business?
A: Rules of thumb are simple pricing techniques that are sometimes used to arrive at a quick ballpark market value using a percentage of revenues or a multiple of a level of earnings, such as seller's discretionary earnings. However, rules of thumb is not a specific methodology we use for a business valuation, but it can be useful in testing the value conclusion arrived through the standard methods. |