Before buying or selling a New York firm, learn how to complete “due diligence.” This is crucial for all organizations, whether buyers or sellers. A good motivated business seller will usually get a better bargain if pre-due diligence work is done to meet a buyer’s anticipated requests promptly. When the paperwork is late, buyers question them. To organize everything, get the necessary documents and meet with your New York collection attorney.
Before buying your business, a buyer can do “due diligence.” A buyer can research the company’s business using financial documents, assets and liability statements, contracts, and inventories. To verify the business’s claims and decide on a reasonable price.
Since you are giving a stranger access to important business information, this is a delicate point in the sale process.
Preparing your company for “due diligence” is like getting your “ducks in a row” and “house in order” at once
- Organizing paperwork: Whether your business is a sole proprietor, partnership, corporation, or limited liability company, gather your organizing paperwork, including your certificate of formation, bylaws, and NY Department of State filings. Contact the NY Department of State for certified copies if you do not have these documents. While you are there, check on your New York business. If it is not, fix it first.
- Real estate: Collect all related paperwork and hand them over to your lawyer so they can make sure the property is free and clear of any liens.
- Insurance: Show confirmation of suitable coverage for your premises and business. This is crucial if your business involves automobiles, transit, or dangerous tasks.
- Licenses and permits: Include all business and operator license documentation. Buyers should realize that food handling permits are non-transferable if they own a food service business. Under certain conditions, other licenses, such as liquor licenses, might be transferred with the firm.
- Agreements: All important contracts with clients, third parties, and creditors. Before a buyer looks, have a New York attorney check these agreements to make sure they are assignable.
- Financials: Prepare bank, profit and loss, and tax returns. In New York, business successors may be accountable for tax liability accumulated before the purchase, so bidders may want to view several years of federal, state, and local tax returns and financial data.
- Assets and liabilities: Lists of employees with compensation received and due, details about open lawsuits, paid and outstanding regulatory violations, as well as stock, money and investments, invoices, business assets like machinery, perpetual debt, total debt, and so on.
