A business purchase can be time-consuming and involve a lot of steps. As a buyer, you must understand about the business you want to acquire to make a smart decision. From market details to the financial health of the business, due diligence will provide you with an idea of what to buy. Phoenix business law attorneys can help you with this process, letting you buy a business confidently. Due diligence has many parts that should be accomplished before you can get all important information.
Evaluating a Business’ Financial Health
Typically, buyers don’t want to purchase a business that has poor financials as this could leave them dealing with debts. As you do your due diligence, investigate the financials of the business to avoid this situation. This includes understanding the performance of the business before, how it is doing now, and the expected finances. With this, you will know how successful the business can be. Your attorney will find red flags such as discrepancies and strange patterns that could damage the business’ future. They will assess its financial statements, accounting records, tax documents, agreements and contracts, debt and financing, industry-specific documents, and employee and payroll information.
Legal Considerations When Doing Your Due Diligence
The due diligence process also includes examining the various legal aspects of the business. You want to ensure the business or its owners are not currently being sued by a party. Also, make sure the business is following regulations and upholding contracts. Your attorney will look at licenses, intellectual property rights, legal liabilities, and contracts to know if the business is a great investment for you.
Factors to Consider When Assessing Business Operations
Every business has areas they excel in and those they may need improvement. Before you purchase a business, understand such areas to know it’s the right purchase for you. Your attorney can help determine how business operations work. In turn, this allows you to understand the efficiency of the business and its ability to grow. The evaluation will include the following:
- Workflow and productivity. This refers to work organization as well as employee and equipment productivity.
- Organizational structure. Your attorney can assess how the hierarchy and roles of the business work.
- Customer satisfaction and retention. The evaluation will include examining customer feedback and their tendency to stick to the business.
- Marketing strategy. Your attorney will have to evaluate how the business approaches marketing and the effectiveness of this approach.
- Growth potential. The assessment will include growth and expansion opportunities for the business.
Determining Tax-Related Issues
Various businesses have various tax liabilities, compliance laws, and risks. Assessing taxes can help determine how taxes affect the business. Does the business owe huge tax sums? How is it established to pay taxes? Consider how the purchase of the company will affect future taxes. By looking into these matters, you can make informed decisions about the purchase. Your attorney will help you request important tax documents like historical tax returns and tax strategy details.
Assessing Technological Infrastructure
Technology today is necessary when running a business and must be part of your due diligence. You want to ensure the business you want to purchase is using the right and up-to-date technology. Your attorney can evaluate IT infrastructure, hardware, software, and cybersecurity.
Buying a business involves a lot of details. Hiring an experienced business attorney can provide you with peace of mind knowing all details are taken care of. Working with a legal professional means having somebody who has knowledge and experience on your side. Your lawyer can help vet possible acquisition opportunities, consider your best interest when assessing the viability of the deal, and protect your rights and interests. Also, they can negotiate the best deal for you.
