Buying A Business 1. Gather documents from seller: a) P & L and Balance Sheet for 3 prior years plus current year to date (monthly P & L are better if seasonal business); b) tax returns for same years or Schedule C’s if proprietorship. 2. List of assets to be purchased & Buyer place a FMV on them. 3. Are you buying assets or the stock of a corp? Hidden liabilities. 4. Buyer or Seller responsible for bills received after sale? 5. Any A/R? Which ones are uncollectible? Who gets $ if collected after the sale? 6. If leasing, get copy of Lease and read paragraph on subletting or new owners. Get written landlord approval if needed. Buyer & Seller sign an “Assignment of Lease” agreement. Talk to owner about future plans for property. If near end of lease, sign new one before purchasing. 7. What inventory being purchased? Any obsolete, damaged, won’t sell? What’s it worth on a cost basis? 8. What is “goodwill” (the extra paid because the business is operating and has a known name) worth? 9. Any other contracts signed by seller relating to the business? E.g. equipment leases, supplier contracts, yellow pages, etc. 10. Have attorney do lien search to make sure assets are free from liens/debts. 11. Do employees know? Will they stay after sale? Do you want them to stay? 12. Will seller stay on to train new owner & introduce to customers? If so, is it part of sale price or extra comp? Get seller to sign a “Consulting Agreement”. 13. Seasonal business? If so, avoid buying at start of slow season.