Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

March 24, 2017

About to buy a business? Evaluate these often overlooked areas first.

By Achim Neumann

The first purchase of a company is a transaction that can be fraught with risk. A rookie entrepreneur’s lack of experience can blind them to parts of the process that can cause serious problems months or years down the road.

They devote the majority of their attention to revenue and profit figures, and in doing so, they often neglect to examine parts of a prospective business that pros seldom ever miss.

Those acquiring a business in the near future should look into these overlooked aspects, as it will spare them from the huge headaches that can result from failing to assess them.     

Legal paperwork

There are few things that keep entrepreneurs up at night than the emergence of serious legal issues. To avoid this nightmare from becoming a reality, prospective business owners should go to great pains to review the intellectual property paperwork, including any copyrights, trademarks, and patents of a prospective company.

Additionally, any consulting agreements should be examined from front to back to make sure everything is in order.

If there are any glaring problems, there’s a good chance the sellers are trying to pass off imminent problems onto the shoulders of a hapless purchaser.

If a buyer uncovers any of these issues, they should run as fast as they can.

Employee retirement plans

It is stunning how many business buyers overlook this large expense when making a decision on whether or not to purchase a company.

This entitlement can have a major impact on its books, tu
rning a business that may appear to be an attractive buy into one that might struggle to make money in the long run.

Those looking to buy any business should take an in-depth look into the regulations they will be compelled to follow when it comes to funding the retirement accounts of their employees.

Furthermore, the previous owner may have neglected to keep their plans up to date with the Department of Labor. This can land an unsuspecting new owner in trouble with the law if the government finds fault with their retirement plans shortly after they take control.

W-2’s and 1099’s

Businesspeople need to be mindful of many different branches of government when it comes to buying and running companies, but of these departments, the IRS tops the list.

One of the biggest tax red flags a purchaser should watch for is the distribution of 1099 forms versus W-2’s.

If this occurs at a company under consideration, they should make certain that this practice is 100% legal as per IRS regulations.

If it is not, consider moving on, as running afoul of this government agency can cost significant amounts of time and money.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or info@neumannassociates.com

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Eric H., Investor

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

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Douglas DiCeglio

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Srini Mudambi

“Claus out of Florida helped us with the sale of our business. We had never done anything like this and him and his team walked us through the process from start to finish. We had some challenges through the process and Claus continued to show up even in the difficult conversations.”

Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs

“A Neumann & Associates is the only business broker I would use or consult with. They have assisted with 3 business sales over the past 15 years with me. They are honest and sincere and have always performed better than my expectations. They are the only one i would use for the sales of my businesses.”

James Belanger, Business Owner

“I wanted to take a second to commend the exemplary customer service from both you [Karin Neumann] and Mr. Valentino. It’s both a rarity in the industry, and very much appreciated.”

Andrew G., Investor

“We worked with Neumann & Associates to investigate the purchase of a research company in 2010 and found Achim to be capable, forthright and realistic. His depth of experience enabled us to fully understand our options, offering creative options that might enable the acquisition. While we didn’t acquire that particular company at that time, we know exactly who to call whenever we’re looking to buy or sell a business.”

Daniel Coates, Buyer
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