ACCTG 1 Lecture Notes - Lecture 9: Due Diligence, Employee Benefits, Weighted Arithmetic Mean
Document Summary
Inventory in place proven track record as leverage in negotiations for favorable terms: the turnkey business: save time and energy. Step 2: develop a list of criteria: based on step 1, develop list of criteria, a potential business acquisition must meet. Narrow choices down to most attractive ones. Investigating 4 critical areas of the business: motivation: why does the owner want to sell, asset valuation: what is the true nature of the firm"s assets? (inventory, equipment. Income statements and balance sheets for at least three years. Income tax returns for at least three years: cash flow, the valuation stage, non-disclosure agreement (nda): a legal contract that requires a prospective buyer. Includes valuation of business and signing a non-disclosure agreement to maintain the confidentiality of the business, its owner, and any information, financial and otherwise, that the buyer sees as part of the due diligence process.
