FULL CPA DUE DILIGENCE AND COMPREHENSIVE BUSINESS ANALYSIS
A comprehensive business analysis is an extension of the preliminary business analysis. Trained and experienced CPSs will fully evaluate all the financial information you have received from the seller and business broker. They will also evaluate the non-financial information that can be located about the company.
The Comprehensive Business Analysis
We believe that a business’s worth should not be just based on the financials alone, which is what almost all appraisers use. It must be based on how viable the business is? Will it survive in this economic condition? Does it have some uniqueness to it that will assist it to compete successfully in a highly competitive market? Financials are a representation of the past and only give a possible indication of the future. You need much more information than this. The comprehensive business analysis uses not just the information you provide but also leverages our experts’ knowledge about the business in general and the business you are considering to provide a holistic estimate of a business worth.
After you have a signed contract, preliminary due diligence has been completed and you have negotiated a new price. The negotiation of a new price happens when you turned up surprises you did not expect and these surprises lower the value of the business, to you. You are still not done with your due diligence at this point in time. You can’t close an escrow based on preliminary CPA due diligence, because the only things that has been reviewed are the obvious things that have caught in your review. What these items are will vary based on the experience of the accountant doing the due diligence.
Willard Michlin has been doing due diligence on hundreds of businesses for 22 years both in his capacity as a business broker and as a CPA. He is very good at finding where the bodies are buried.
This is where we look in detail at the general ledger of the company, and compare them with the income tax returns, payroll tax returns and brokers add back sheet of personal expenses deducted from the business, and added back to the profit of the company by the seller or broker. This is where the bank account reconciliations are done if it is determined they are needed. We also get the answers to “The twelve questions a buyer should always ask.” (A print out of the questions is available on the website). Also any non-financial information not confirmed already is followed up on.
This information will then be broken down in detail and explained until you fully understand the workings of the business and all the red flags that we uncover. We will walk you through the process of obtaining all the necessary documentation and advise you on a suggested courses of action as the process takes place.
This service is unique to our firm and is not provide by any other firm to the best of our knowledge. When we are done with this process, it is conceivable that we may know more about this business than the seller. At least we will work to know as much as the seller knows, including why he really wants to get out of his business? We have so much confidence in the quality of our service that we will sell a guarantee, for an extra fee, that you will not be defrauded by the seller, on businesses we work.
A CPA AUDIT
It some cases the buyer needs to get financing from a bank or if the buyer is a public company, the board of directors needs Audited Financial Statements. This is done by Qualified CPAs.
An audit, in the context of buying or selling a business is best defined as Systematic examination and verification of a firm’s books of account, transaction records, other relevant documents, and physical inspection of inventory by qualified accountants (called auditors). We provide auditing services to ensure that when you exit escrow you get everything you paid for and nothing you didn’t. The audit is the last key component of a smooth and successful business transfer.
We have on our associate CPA that for many years has been auditing public companies and non-profit organizations. If this is what you need we will provided it for you.
Everyone loves getting something for NO CHARGE. In real life there is no free lunch. We do ask for something in return for our services. However, many people only have a few questions or are uncomfortable paying out money before knowing the consultant better or before finding a business to buy. This is understandable, so we offer this alternative.
If you want to get to know the consultant better, and get the answers to a few questions we have a No-Charge Mini Consultation. This is limited to about twenty minutes and is only delivered in-person at our Seal Beach location.
The CPA and you can get to know each other while you get some of your questions answered. In return we ask that you take 10 minutes and answer our survey.
This survey helps us better understand the needs of business buyers and tells us how to better deliver a quality product. This interview and survey cannot be done over the phone to satisfactory results, so contact us to schedule an in person meeting.