Pre-qualification of each business opportunity involves communicating with each seller and/or the seller’s representative, obtaining and reviewing pertinent business information and records and performing a preliminary evaluation to determine whether the business represents a valuable opportunity and meets the client’s purchase criteria as outlined during the client interview.

Screening and Reviewing:

It is very essential to review the company’s profile and thereafter, more detailed records and information to ensure that there will be a solid audit trail to corroborate the seller’s representations of value. Throughout this process legal guidance with accounting and tax expertise enables the business brokers to respond to a variety of buyer questions and concerns and participate and manage the transaction aimed toward streamlining the process of consummating a purchase.
For example, Business Brokers will analyze the gross profit percentage from year to year and examine whether any expenses have been substantially reduced from year to year to make the business look better for sale (i.e. a reduction of advertising, promotion or marketing expenses or employees could have been released). If depreciation declines dramatically from one year to the next, it might be an indication that equipment has come to the end of its useful life – if so, when and at what cost, will it have to be replaced.

These two procedures will help a buyer to take an informed decision about a business acquisition.

Visit Quantum™ Blog for more information on business transactions.

This entry was posted on Monday, October 22nd, 2007 at 1:52 pm and is filed under Buying a business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.