Just Elementary, Inc. » Due Diligence
Impact of the Customer Concentration for a business when doing due diligence for the purchase of a business
Customer Concentration is a very big deal for the owner of a business, which also applies to a buyer considering purchasing that business. How does this impact the Due Diligence process and the decision to buy the business when investigating the potential of a business? Because there is an inevitable attrition or defection of customers when a new buyer takes over, it’s important to analyze the customer concentration. Naturally, upon change of ownership some customers will … Read entire article »
Filed under: Due Diligence
Questions to ask when buying a business
Buying a business is a complicated process that involves asking many questions to determine whether or not a business is worth buying. Over the course of time, you will see additional posts expanding on each of the questions below in greater detail. Keep in mind that the list of questions below does not apply to all businesses. And, of course, the list is not complete. Always consult legal professionals for legal advice when researching and … Read entire article »
Filed under: Due Diligence
What is a Business Broker & How Do They Help Me Sell My Business?
What is a Commercial Business Broker? A Business Broker helps a Business Owner Sell his or her business to a Buyer. Similar to Residential Real Estate Agent, except the client/product is a business, not a house. Here are common questions we get: Question: Does a Business Broker Buy the Business from a Business Owner? Answer: No! A Business Broker packages a business for sale and markets the business to attract qualified buyers. What does a Business Broker Do for Business Owners? Prepare the … Read entire article »
Filed under: Business Tips, Business Valuation, Commercial Leasing, Due Diligence, Featured, Negotiation, Selling A Business
Tips for Business Buyers & The Role of the Business Broker
The following video will highlight some introductory tips and suggestions for buyers who are looking to buy a business. The process of finding a good business to buy can be a hard and frustrating one. Our simple tip to minimize frustration and maximize results is to narrow and focus your search to businesses that you are qualified to run based on your skill set and background. This also has the benefit that you have a higher … Read entire article »
Filed under: Business Valuation, Due Diligence
Non Compete Covenants in the Sale of a Business
During the course of negotiating a purchase and sale contract for a business, Non-Compete Covenants need to be addressed. Just for reference, Non-Compete Covenants are also referred to as Covenants Not To Compete. Let’s get down to it. What is a Non-Compete Covenant? In the case of the sale of a business, it is contractual covenant that dictates that the selling party will not compete against the buying party by opening or partnering in a competitive business. … Read entire article »
Filed under: Due Diligence, Selling A Business
Pitfalls of Buying an Existing Franchise Business
There are a lot of benefits to buying an existing franchise business. However, in this post we will cover some drawbacks that pertain to acquiring an existing franchise business. Having an extra party in the process, that being the seller of the existing location. Never underestimate how much extra work it is to negotiate, and by adding the existing owner as another party to … Read entire article »
Filed under: Business Tips, Due Diligence, Franchises
Discounting Inventory & Deferring Payments During Escrow
In the middle of a transaction of selling your business, the topic comes up of counting the Inventory. You say, of course, to ‘do it’ so an accurate sales price can be determined for the business plus the inventory at your cost. You also let the buyer know that the inventory amount is ($500,000 for example), and it is all in good saleable condition. The buyer asks you how often you turn the inventory and … Read entire article »
Filed under: Business Valuation, Due Diligence, Negotiation
Who Pays Sales Tax on FF&E for a Bulk Sale Escrow
When buying and selling a business in California, there is the not so little matter of paying sales tax. Yes, sales tax when buying a business, just like you would pay sales tax on a pair jeans at the department store. The theory is that when you are buying a business, you are not just buying the Goodwill, but you are also buying tangible equipment critical in the operation of the business. That tangible property … Read entire article »
Filed under: Business Tips, Due Diligence
Buying a Business, Do I really need an Escrow?
A common misconception is that escrows are only for buying a house or commercial property. Often times a novice business buyer will buy a business and simply hand a check to a seller. Yikes! Using a bulk sale escrow is an important legal step in buying a business in California. What is a bulk sale escrow? Glad you asked! … Read entire article »
Filed under: Business Tips, Due Diligence
Does Trust Matter in the Due Diligence Process
You have your Due Diligence Checklist, and you are making progress on completing it, but one thing is in the back of your mind. Trust. Do you really trust the other parties involved in the transaction? … Read entire article »
Filed under: Due Diligence, Featured
Due Diligence Service for Small Businesses – The Process & Checklist
When it comes to doing Due Diligence on the purchase of a small business, it is important to recognize that every business is different and you will need to figure out which are the most important items in your situation. With that in mind, the above are some basics to have in your checklist. Remember, not all of these may apply to your particular situation, and your situation will require specific focus. For a consultation … Read entire article »
Filed under: Due Diligence, Featured
Due Diligence Buying a Coin Laundry Laundromat
A self service ‘coin’ operated laundry sounds like a glamorous and easy profit business. It isn’t, but it can be. If you polled a lot of laundry owners, as we have, you will find that most of them will tell you from experience that there are a lot of ways to lose your shirt when investing in a laundry business. While a coin laundry sounds like a simple business that you buy and then collect … Read entire article »
Filed under: Business Opportunity For Sale, Business Tips, Due Diligence, Featured
Small Business Due Diligence – Verifying Seller’s Tax Returns via IRS 4506
When trying to buy a small business, it is important to do your Due Diligence to gauge the suitability of the business to your needs, and to make you are paying the appropriate price for the business. One important step is to verify the tax returns that have been filed by the owner of the business. Of course, if the seller hands you copies of the Tax Returns, should you just automatically assume that they … Read entire article »
Filed under: Business Tips, Due Diligence
Nuts & Bolts to Due Diligence
What are the nuts and bolts of doing Due Diligence on a Business Opportunity? Of course this answer varies from business to business. In this post, we will discuss doing due diligence on B2B (Business to Business, i.e. Non-retail) businesses, such as manufacturers, service businesses and Distribution businesses. Naturally, you need to consult with legal and financial professionals in the process of doing due diligence, and even before you start. This post is informational in nature, … Read entire article »
Filed under: Business Tips, Due Diligence, Negotiation
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