Brinen & Associates

In-House General Counsel Services for your Company

Contact us today at (212)330-8151

  • About Us
    • Joshua D. Brinen
    • Martha Thrush
  • Practice Areas
    • Transactions and Corporate Law
    • Securities & Finance
    • Tax Planning and Controversy
    • Commercial Litigation
    • Commercial Real Estate
  • How We Can Help
    • Forming Your Company
    • Financing Your Company
    • Operating Your Company
    • Hiring Independent Contractors and Employees
    • Growing Your Company
    • Defending Your Company
  • Blog
  • Contact Us
You are here: Home / business of law / Buying A Business? Read The Books

Buying A Business? Read The Books

August 16, 2016 by Joshua Brinen

Buying A Business? Read The Books“A budget tells us what we can’t afford, but it doesn’t keep us from buying it.” — William Feather

One recent highlight in regarding the upcoming election is the call for the candidates to release their personal tax returns. There is, in fact, no law that obligates candidates to publicly reveal their finances. However, it does help with transparency and can equate to trustworthiness and the same can be said for sellers when buying (or selling) a business.

I’ve advised on both sides of a transactions, and can provide a basic outline for both. For now, we’ll focus mostly on the buyer.

Proper Etiquette And Due Diligence

Normally I get a call from a client when they’ve identified their target. Of course, it’d be better to receive that call a little earlier but it’s not a dealbreaker. Once you’ve figured out the type of business you’d like to purchase or acquire, you approach the entity politely and respectfully. Send correspondence by mail, and make an in-person visit.

If the owner considers entering discussions and negotiations with you, then it’s during this time when we’d ask him or her to show us the corporate tax returns so that we can conduct due diligence. This is the process we use to view proprietary documents to establish an offer price. It often comes with a confidentiality agreement, so don’t go running your mouth (or fingers) off on social media if you think you’ve hit the jackpot.

Warning Signs

Right off the bat, if he/she declines on the tax return, then it’s time to walk away. A seller not showing a tax return is a sign that something’s amiss. That means that the books are not being well-kept, or that there are some shady dealings happening.

As the buyer, you want to base your purchase price off the number on the tax return. It’s generally a lower number than what the seller wants it to be.

The fact is, though, that you should always assume the other side isn’t being totally forthcoming. I’m not saying they are actually cheating, but act as though you know they are. And that’s fine, because when we do proper due diligence, everything will be revealed.

Ignore The Market

Generally, there is no market that is especially favorable to either side of a purchase. You’re entering negotiations because you want to expand, or because you believe you can run this new business better than it had been and can make more money doing so.

You do it when you’re ready. Plain and simple.

On Thursday, we’ll look at this scenario from the seller’s perspective.

Contact Brinen & Associates if you believe you are ready to start looking at other small businesses for a possible acquisition.

Related Posts

  • Active and Passive Businesses and the Proposed Tax Reform Bill
  • Is The Ebb & Flow Model Right For Your Small Business?
  • Essential Questions For Your Small Business Lawyer
  • Getting Credit for Thinking Ahead
  • Training Clerks To Make It Work

Filed Under: business of law Tagged With: Budget, Buying a Business, Due Diligence, Tax Return

Private Companies Services

  • Corporate Formation and Governing Documents
  • Corporate Governance and Corporate Management
  • Shareholder Agreements and Buy-Sell Agreements
  • Corporate Transactions
  • Tax Planning and Controversy
  • Corporate Planning
  • Corporate Structuring for Outside Investment
  • Structuring of Equity Compensation for Key Participants
  • Operating Agreements and Partnership Agreements
  • Disposition and Dissolution
  • Commercial Litigation

Practice Areas

  • Transactions and Corporate Law
  • Securities & Finance
  • Commercial Litigation
  • Commercial Real Estate
  • Estate Planning & Administration

Contact Us

Fields marked with a * are required.

Frequently Asked Questions

  • How do you merge an Limited Liability Company and a corporation?
  • I have a DE corporation with offices in NJ and NY. Most of our business is conducted in NJ, but we are headquartered in NY. Do we need to file taxes in all three states?
  • For corporations, which jurisdiction has the lowest state taxes?
  • What tax benefits are there to forming a trust rather than a will?
  • I am interested in forming a non-profit corporation in NY; can I be the sole shareholder and director?

CONTACT US

Brinen & Associates
90 Broad Street, Second Floor, New York, NY 10004
URL of Map
Phone: (212)330-8151
  • Facebook
  • LinkedIn
  • Pinterest
  • Twitter

Practice Areas

  • Transactions and Corporate Law
  • Securities & Finance
  • Tax Planning and Controversy
  • Commercial Litigation
  • Commercial Real Estate
  • Estate Planning & Administration

FAQ's

Clients often come to us with some basic questions or problems to solve. Maybe they are entrepreneurs about to start a new business. If so, there are some threshold issues that need to be resolved about the right kind of company to set up and where it should be located. Or maybe it’s an individual who is beginning to think about writing her will. So we have prepared a few FAQ’s covering the type of inquires that we hear most frequently from clients and prospective clients.

READ OUR FAQs
©2020 Brinen & Associates, LLC - All Rights Reserved. | Disclaimer | Developed by Good2bSocial
logo
  • About Us
    • Joshua D. Brinen
    • Martha Thrush
  • Practice Areas
    • Transactions and Corporate Law
    • Securities & Finance
    • Tax Planning and Controversy
    • Commercial Litigation
    • Commercial Real Estate
  • How We Can Help
    • Forming Your Company
    • Financing Your Company
    • Operating Your Company
    • Hiring Independent Contractors and Employees
    • Growing Your Company
    • Defending Your Company
  • Blog
  • Contact Us