Due diligence when buying a business
March 6, 2023
As accountants, we can play a crucial role in helping clients conduct due diligence when purchasing a business. We can assist by thoroughly reviewing financial records, including income and expense statements, tax returns, and other financial documents, to ensure that the business is financially sound and profitable.
Additionally, we can help our clients identify and manage potential risks associated with the purchase of the business, such as legal or regulatory compliance issues or financial liabilities. By leveraging our expertise and knowledge, we can provide valuable insights and advice to help clients make informed decisions about the purchase.
As accountants, we can assist with due diligence when acquiring a business by:
- Reviewing financial records, such as Profit/Loss Statements, Balance Sheets, Tax Returns, BAS Statements, ATO Portal, Bank Statements, and Forecasts & Budgets, to evaluate the financial health of the business.
- Analyzing the data to identify trends, assess profitability, and determine potential risks or liabilities.
- Reviewing supply contracts, property leases, and finance contracts to identify any legal issues that could impact the acquisition.
- Ensuring that the business is compliant with all applicable laws and regulations.
- Analyzing the relationship between the business and its major customers, reviewing past price rises and payment terms, and assessing whether the business owner has a dominant relationship with the customer base.
- Reviewing the asset register to identify all assets included in the sale and assessing the condition of each asset.
- Determining the value of the assets.
- Assess if the purchase price is reasonable.
- Reviewing the employment contracts or agreements of the staff to determine the employee entitlements and whether there are any OHS procedures in place.
- Assessing the skills and experience of the staff to determine their value to the business.
- Providing clients with valuable insights and advice based on our expertise and knowledge to help them make informed decisions about the purchase.
We can also provide support throughout the acquisition process, including assisting with financial negotiations and developing a comprehensive post-acquisition financial plan. By working closely with clients and other professionals involved in the transaction, we can help ensure a smooth and successful acquisition process.
In summary, as accountants, we can help clients conduct due diligence and make informed decisions when purchasing a business by providing financial expertise, risk management advice, and ongoing support throughout the acquisition process.