Roseville Tax Due Diligence Accountant for Company or Asset Purchases
Our Roseville accountants at Cook CPA Group can help you navigate the tax due diligence process if you are buying or selling a company asset. Call now.
When a company purchases another business or major asset, both the buyer and the seller will need to consider the implications for their taxes and future financial health. It’s advisable for companies that are involved in the purchase or sale of a company or asset to use an accountant to perform due diligence and ensure that tax liabilities are appropriately allocated among all the parties involved. If you are involved in a company or asset purchase as either a buyer or seller, you should seek the assistance of an experienced accountant to ensure that the transition goes as smoothly as possible and that the move is in the best interest of your financial security.
The Due Diligence Process When Buying or Selling a Company or AssetDuring the process of due diligence, the buyer will examine all of the business records and documents relevant to the purchase. This process usually occurs after the parties have signed intent-to-purchase documents but before they have entered into a formal purchase agreement. The documents examined during the due diligence process are those that might show liabilities, such as sales agreements, purchase agreements, liens, documents pertaining to litigation and lawsuits, and other paperwork that might expose the health of the company being purchased. The process may also involve visiting the business location to speak with employees and appraise the condition of facilities, equipment, and property, as well as examining any plans for expansion.
Considerations During the Due Diligence Process in Roseville, CADoing due diligence prior to the purchase of a company or asset involves taking a close look at the history, current state, and future goals and direction of the company. The aspects that are taken into account when a company is undergoing an examination before purchase include:
- Management and employees – When performing due diligence on a company that is being purchased, an accountant will consider the person or persons that are in charge of the company, along with their credentials. A due diligence accountant will consider the people that make decisions in the company, such as executives and board members. The accountant will also examine employment contracts, the employee handbook, and other documents that relate to employee pay and benefits, including tax reports.
- Legal matters – The due diligence accountant will perform an investigation into the legal structure of the business that is being purchased. This will involve viewing copies of bylaws, meeting minutes, contracts, warranties, service agreements, and product liability documents. Any current or pending litigation and the company’s relationship with OSHA will be reviewed as well.
- Operations – When assessing the operations of a company before purchasing it, a due diligence accountant will identify customer patterns, study the company’s business model, look at the market that it operates in, study the trends that drive it, and research public perception surrounding the company.
- Products and services – The products and services offered by the business will be assessed during the due diligence process. If the company being sold creates products, they will need to produce a catalog or listing of the products they sell, along with brochures, price listings, and information regarding the competitiveness of these products in the market. This information is in addition to pricing strategies, service availability, terms of service, patents, copyrights, trademarks, and licenses, along with projected growth rates for top products.
- Marketing – Analysis of the marketing a company does entails looking at the company’s marketing materials, market analysis, growth opportunities, and purchase agreements. An analysis of the company’s strengths, weaknesses, opportunities, and threats (also known as a SWOT analysis) will occur, along with a review of the company’s competitors in the past, present, and future.
- Competition information – When assessing a company’s competitors, a due diligence accountant will examine the company’s customers, operations (including fixed assets, facilities, supplies, contracts, and more), and financial matters. The company’s profitability will be verified, and the financial data will be checked against common financial ratios.