| Asking Price: |
$435,000 |
| Annual Sales: |
$1,500,000 |
| Cash Flow: |
$200,000 |
| Inventory: | $265,000 |
| FF&E: | $60,000 |
| Leaseholds: | N/A |
| Employees: | 1 FT Owner 7 FT |
| Location: | Front Range |
Profitable Boulder home improvement retail and installation company. […]
“Due Diligence” or the “Right of Inspection” gives the buyer the full rights to inspect all items in a business — financials, equipment, inventory, premises and anything else.
And if the buyer finds any material discrepancies, he or she usually has the legal option of backing out.
Some transactions fall apart during due diligence, only because the sellers have ignored fixing the problems of their business and just hope for the best.
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Reporting a lower inventory to their accountant is something many business owners have been doing for a long time. And many accountants just accept the number.
In addition to the obvious concerns, when it comes to selling the business, big problems can arise. How will the inventory be valued in the Purchase Allocations? And who is going to have to pay the various taxes on the larger amount?
Business owners should give their accountants an accurate inventory value each year to avoid troubles at the closing table!