What You Should do if You are Buying a Business
By Lane V. Erickson, Idaho Business Attorney
If you are reading this article, then you should be congratulated. This means that you are considering buying a business and becoming a business owner. This is a big decision, and a big step for any person to take.
The good news is that we are here to help you. Our premier team of Idaho business lawyers have the experience, skill, and knowledge, to provide sound legal advice to each of our business clients, especially when it comes to buying an existing business. At the Racine law office, our team of attorneys includes partners Lane Erickson and TJ Budge, and attorneys Nate Palmer and Dave Bagley. Whether it is creating or buying a small business, or working through the intricacies of negotiating contracts, or helping clients when something goes wrong, we have helped numerous Idaho business owners make sound decisions that have helped their businesses succeed. We are confident we can help you too. If you have questions, please contact us for a free 30-minute consultation.
The focus of this article is to describe some of the things that you should do when it comes to buying a business. Keep in mind that this article is just a summary. If this is what you really are considering, then you should meet with a qualified business attorney who can give you additional guidance and direction on the things that you should do.Get a Copy of All the Documents
Our number one recommendation of the things that you should do if you were considering buying a small business is that you get a copy of all the documents associated with the business. There are many.
The first set of documents that you should get include all the corporation or business records. In other words, all the documents associated with the actual creation and operation of the business. For an LLC, this would include the certificate of organization that was filed with the Secretary of State’s office; The operating agreement; the annual reports; and the minutes of any meetings that have occurred within the business. A regular corporation will have similar documents, but they will be named differently.
Next, you should get a copy of all financial documents. This would include all banking accounts, and all accounting documents such as balance sheets, financial statements, general ledgers, and profit and loss statements. You should be able to get access to at least two years’ worth of these records if not more.
Additionally, you should get access to all tax filings made by the business. They should be available for at least five years or longer. These would include all federal and state filings. This should also include any amendments to any tax filings that have been made at any time.Hire a Business Appraiser
The next suggestion that we make is that you hire a business appraiser to help you determine the value of the business. It is important that you find an appraiser who is properly licensed and experienced in doing these kinds of valuations. Additionally, given the nature of the business, it is possible that you may need a specialized business appraiser who does nothing, but appraises businesses like the one you are considering purchasing.
The business appraiser you hire will want all of the records listed above. They may also require additional documentation or records to be provided by the current owner of the business. In the end, the appraiser will be able to provide you with a range of values associated with the business you were considering purchasing. This will allow you to know whether the purchase price being offered is reasonable.Talk to Existing Customers
Finally, we recommend that you meet with and talk to existing customers of the business you are thinking about buying. Doing this allows you to get to know not only who the customers are but also get a feel for their thoughts and feelings about the business you are considering purchasing. There is no better way to know how a business is doing than to talk to the customers.
Additionally, this will give you an idea of the types of customers you will be dealing with as the owner of the business. This will help you determine whether you want to expand your customer base through additional services or products.
As mentioned above, this article provides a starting place for you if you were thinking about buying a business. However, you should talk with a qualified business attorney before purchasing any business. Doing so will help you answer all the questions you may have before the purchase occurs. We have helped numerous clients purchase ongoing businesses and we are confident that we can help you too!ENLIST AN IDAHO BUSINESS ATTORNEY TO HELP YOU
Our team of Idaho business lawyers can help you with any of your business structure or operation needs. Whether you are seeking to create a new business or review a current business, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877-232-6101 or 208-232-6101 to schedule a free consultation. You can also email us directly at firstname.lastname@example.org or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho business problems.