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Due Diligence Checklist for Purchasing a Business in Florida
There are two things you absolutely need to know if you’re considering purchasing a business in Florida: the legal standing and the financial standing of the target business. That means conducting due diligence.
Due diligence is the process of verification and information gathering prior to purchasing a business. Basically, due diligence verifies that you know exactly what you’re purchasing and that you’re paying a fair price.
Due diligence uncovers potential deal breakers, like hidden environmental liability concerns or court judgements, and clarifies the target business’ financials.
This blog will break down two key areas of due diligence if you’re planning on purchasing a business in Florida: financial and legal.
Financial Due Diligence Checklist
- Annual and quarterly financial info, including income statements, balance sheets and cash flow statements
- Quarterly and annual projections
- Three years of tax returns
- Three years of bank statements
- Accounts receivable info
- Business inventory, including current inventory and its value
- Market value of real estate and/or copy of lease
- Summary of debts and their terms
- Summary of current investors and shareholders
- Employee list and payroll information
- Equipment list
Special Considerations: Purchasing a Business that deals in Cash
Special considerations must be made if you are planning on purchasing a business in Florida that deals primarily in cash. These include:
- Three years of register tapes plus the current year to date
- Three years of Cost of Goods Sold (COGS) plus current year to date
- Three years of cash expenses including payroll and COGS
Legal Due Diligence Checklist
Legal due diligence is the second critical task prior to purchasing a business in Florida. To adequately measure risk, you should receive copies of the business’ contracts, including:
- Purchase agreements
- Distribution agreements
- Sales contracts
- Business registration documents
- Articles of incorporation
- Employee and contractor agreements
- Trademarks, copyrights, trade secrets, and patents
Let AADS Simplify the Due Diligence Process
All American Document Services helps lenders, investors, and business owners perform comprehensive due diligence on businesses, individuals, and properties. If you’re involved in a business transaction, All American Document Services can give you a complete picture of the asset side and the legal liability side of the seller.
We provide due diligence with accurate and timely on-site searches and retrieval of all business, real property, tax, and legal documents.
To learn more about what makes us different from other Florida due diligence providers, check out our AADS Advantage page.
If you’re ready to get started, Place Your Order today!
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