Question: What financial issues should I consider during the due diligence process?Answer:
Before purchasing a business you will want to go through the due diligence process with a help of a lawyer to consider the following financial issues:
1. Tax and stamp duty implications of buying the business;
2. The valuation of assets for the best tax advantage;
3. The analysis of the business’ past financial records such as balance sheets, profit and loss statements, tax returns, purchases and sales records and bank statements to assess cash flow, break even point and profitability of the business;
4. Sales patterns and records;
5. Warranties and refund policies that might affect you;
6. Industry outlook and benchmarking.