When buying a business in California, it is important for buyers to do their due diligence. Failing to do so can lead to many problems down the road. Here are a few things to consider:
- Review the governing documents of the entity that currently owns the business. If it is owned by a LLC, review the operating agreement. If it is owned by a corporation, review the corporate bylaws and shareholders agreement. If a partnership owns the business, review the partnership agreement. Doing this will help you spot any possible red flags. A business attorney from Beverly Hills Law Corp., PC can help you review and interpret these often complex documents.
- Review the business? current customer lists and vendor lists.
- Review all of the business? current liabilities, including any debts owed.
- Hire a CPA to review the business? tax filings, profit and loss statements, annual reports, general ledger, accounts payable and receivable reports, and other financial documents.
- Determine whether the business has the licenses and permits that the law requires.
- Search the Internet for any references to the business.
- If the business leases its space, be sure to review the lease. A real estate attorney from Beverly Hills Law Corp., PC can help you with this. Our lead attorney is also a real estate broker.
- Have a detailed discussion with the current owner as to why the business is on the market.
- Review all documents related to employees, including HR policies, any employment contracts, etc.
- Determine whether there are any legal actions pending against the business.
- If the business has physical assets, be sure to thoroughly inspect them, including inventory, office equipment, manufacturing equipment, and real estate.
- Examine all insurance policies that the business has in place.
These are just a few of the considerations that one must look into when purchasing an existing business. For a more complete understanding of what to expect–and help with the purchase–contact us at Beverly Hills Law Corp., PC for a free consultation.Back To All News