Extending Consumer Credit Requires Compliance With Federal Laws

It’s important for any prospective business purchaser to perform due diligence in researching a potential target business. A few of the documents you’ll have to collect and review on your analysis of whether a specific business would be a fantastic acquisition include the following kinds of documents.

1. Corporate and Organizational
O Certified copy of articles of incorporation and bylaws of business and subsidiaries as currently in effect;
o Partnership agreement and any amendments thereto;
O A copy of the most current organization chart available of this company;
O A list of states and foreign countries (if any) where the Company is
qualified to do business; and
O All names under which the firm has done business in the last five years; this includes registered and unregistered trademarks, fictitious name statements.

2. Financing Documents
O All loan agreements, debt instruments, and other funding tools, and all related material documentation, to which the provider is a party.
O A list of all mortgages, liens, pledges, security interests, charges, or other encumbrances to which any property (real or personal) of the Business is subject and all associated material documentation;
O Schedule of short-term and long-term debt (including capitalized leases, guarantees, and other contingent obligations).

3. Financial Statements
o All audited and un-audited financial statements;
O Short description of contingent liabilities between the Company, like pending lawsuits and threatened litigation;
O Name of accountants and length of relationship with accountants; indicate whether the accountants possess any interest in or hold any position with the Company or its subsidiaries;
O Budgets, business plans or projections (for the Company and some of its subsidiaries) made on a quarterly, annual or other basis during the previous 3 fiscal years.

4. Contracts & Leases
O Real estate rentals. Think about the duration of this lease and the quality and location of the area and decide if your company needs would be fulfilled;
o Equipment leases;
O Purchase and sale contracts for products and services [uniforms; food providers]

5. Tax Matters
o Are back taxes owed?
O Are there any pending tax lawsuits?
o Does any local, state or federal taxing authority have any liens against the real property or business personal property you would be acquiring? If so penalties, interest and attorney’s fees could greatly increase the price of fulfilling the tax lien.

6. Identities of Directors, Officers & Shareolders
O You need to carry out a background check on every one of these people to check whether there’s any pending litigation against them.

7. Owned Real Estate
O require a list of owned property to aid in valuing the company and determining liabilities.

8. Insurance
O You’d wish to have copies of the insurance policies, in addition to the name and contact information to the insurance broker, going back four years from the time of buying the business. Check to find out if the insurance policies will cover you, as the new firm, for any damages alleged to have occurred before you acquired the company.

Finally, a number of different factors associated with financial and other things must be considered before taking the plunge.