Evaluating the company

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
  • Leases
  • 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?