The first thing a buyer will do is evaluate the company by its history. The buyer needs to understand certain key aspects of the company such as:
- The company’s method of acquiring and serving it’s customers
- How the sales, marketing and finances inter-relate
To do this the company’s financial statements, operating practices and other documents must be reviewed. These include:
- The balance sheets
- Income statements
- Sales journals
Other assessments based on various aspects of the company’s operations must also be made upon:
- Personnel- for example, what are the responsibilities, rates of pay etc of each employee?
- Marketing- for example, who is the geographic market area?
- Patents- a list of patents and copyrights should be reviews in terms of when they expire.
- Taxes- for example, what was the outcome of the last tax return?
- Legal issues- for example, are all state registration requirements being met?
- Competitors- for example, what disadvantages/ advantages does the company have over its competitors?