Shawn B. (his real name was changed to preserve the confidentiality of the client) turned out to be a real lucky one. He was even more fortunate than someone who hit the jackpot in a casino.

Having started the due diligence of the acquired business, he was pleasantly surprised: on the very first day of the audit, the owner provided not only all the requested documents but also access to the accounting database, where all transactions were well documented. The documentation didn`t raise questions.

Then it turned out that the business had its own accountant, so there was no need to wait for answers from external services. The entire due diligence was carried out surprisingly quickly and clearly.

For the sake of truth, I must say that almost always the picture is diametrically opposite.

People always expect to buy a business with a well-organized account, especially if they are faced with buying a business for the first time.

The reality is completely different.

Situation 1. The owner doesn`t keep records at all, stores all primary documents in a box (literally in the box), and periodically gives it to the accountant to make tax reports. Generally, such reports contain a bunch of errors, and in the business itself, there is no operational report. Read more about checking tax documents in our article.

Situation 2. Business owners have an accountant on salary in the company. This is usually the girl who answers the phone. When she applied for the job, she was asked: “Do you know QuickBooks (bookkeeping software).” She answered yes, although she only knew the name of the program. In addition, she lacks knowledge of the basics of accounting. As a result, she unknowingly presses the wrong buttons, writes crazy postings, and makes fabulous reports. The business owner is confident that his bookkeeping is excellent. Consequently, errors pop up only during the check.

It is important to remember that when you are given access to the accounting system, which consists of some errors, you need to obtain primary documents (usually invoices). The practice of keeping records in such companies doesn`t allow linking one with the other.

Once, a client checked out a construction company where the cost of materials was 150 thousand dollars per month. These materials costs were paid by credit card. The owner wrote “material costs” as the purpose of the payment. He didn`t specify any details (what materials, what projects, and so on). Perhaps it was some kind of inappropriate spending.

To get an idea of ​​what is happening in the company, it is necessary to do recovery accounting. For this, all primary documentation is collected for a certain period (depending on the number of transactions), for example, a month, and all data is entered into a new database. As a result of this accounting, it will become clear how much the result differs from what was recorded by the seller. Usually, the difference is enormous. Read our article "Who checks the business" to see for yourself.

Communication also brings difficulties.

Проверка бизнеса ожидания и реальность 3

  • The speed of receiving documents and replies from the owner is low. Usually, the seller resists because he is afraid to find out what is going on in the company.
  • It is important to agree on a list of what will be checked and in what time frame; these stipulations will be right in the proposal. The seller must undertake to provide all specified documents.
  • If you are bringing in professionals, make sure they are available when you need them. Be mindful of the due diligence schedule, as meeting deadlines is very important!
  • Don't wait for the seller to provide all the paperwork. He needs to be reminded when something is missing from the list. You can state, “We are not interested in your internal relationships. You have not undertaken to provide the documents." You can learn how to properly negotiate in a critical situation in the CLASS Negotiating.

For a successful check, we also recommend reading the CLASS Business Due Diligence.

Read What Our Clients Say (Google Reviews)

  • Absolutely thrilled with my experience at Florida Buy and Sell and especially working with Alyona! She was professional, courteous, and incredibly knowledgeable, making my business buying transaction smooth and hassle-free. Their expertise and dedication to customer satisfaction really stand out in the industry. Highly recommend for anyone looking to buy or sell business with confidence. A true gem in Florida’s market!
  • I enjoyed working with Alyona Safonova as a business broker, and I cannot recommend her highly enough! Alyona is a true professional with a deep understanding of the market and a talent for finding the perfect match for her clients. She guided me through the entire process with expertise and patience, always available to answer my questions and address my concerns. Her dedication and hard work resulted in a successful sale that exceeded my expectations. If you're looking for a knowledgeable, reliable, and results-driven business broker, look no further than Alyona Safonova! 💼👍
  • I've been dealing with Florida Buy and Sell in my professional capacity as an immigration attorney assisting foreign individuals in buying businesses in the U.S. I can attest to the high degree of diligence displayed by Florida Buy and Sell in all business transactions I witnessed. My primary point of contact, broker Alyona Safonova, has always been responsive to my clients' inquiries and meticulously collected all financial documents necessary for the effective transaction.