Buying a business is an exciting and over-whelming time for a “soon-to-be” new business owner. Buying an existing business should represent less risk, time and resources than starting a new business from scratch, but the venture of becoming a business owner is still very risky. In order to mitigate some initial risk, we suggest that you perform financial due diligence, which is the process of conducting an investigation of the target business to determine the “true financial condition” and any financial implications of the proposed transaction.
Quality of Earnings Report
The most common report requested by potential buyers is a “quality of earnings” report or engagement. The objective of a quality of earnings engagement is to assess the sustainability and accuracy of historical earnings as well as the achievability of any earnings projections. A quality of earnings report provides a detailed analysis of all the components of a target business’s revenue and expenses.Read More