Buy / Sell Existing Private Limited Company Registration in Delhi

Buy / Sell Existing Private Limited Companies Registration

Purchasing an existing business offers significant advantages over starting a business from scratch. An existing business should have a history of sales and profits and processes and procedures that are already in place, as well as employees who are familiar with the operations. Existing businesses also have a customer base that can provide immediate sales. Because of these advantages, an existing business is usually more expensive to purchase. Fortunately, it is usually easier to obtain financing to purchase a business than to start a new company.

If you have decided to buy an existing business, you will want to be sure you are making the right choice in your new venture. Only you can determine the right business for your needs;

There are many different types of businesses to buy. Take these steps to narrow down the list of potential businesses you may want to purchase.

• Profit and loss statements and balance sheets describing the company’s financial performance represent one of the first things to look at. Older guidelines suggested the buyer get at least a three-year history of income and expenses to determine the degree of profitability, and the list of assets and liabilities to see what changes have been made over the period being reviewed. Because of the recent dips in the economy, it now is recommended that the buyer review five to seven years' of history to gain an idea of the overall financial pattern for the business.

• Supporting financial documentation to review includes accounts receivables and accounts payables legers, depreciation schedules and related reports. If the buyer requests and seller agrees to a more thorough analysis, the due diligence may include a review of bank records, tax returns, vendor invoices, along with sales and payroll tax filings. Supporting documentation might also include equipment maintenance records and employee files.
• Premises leases and equipment lease agreements should be reviewed so the buyer understands the lessee responsibilities under those agreements.
• Are the business permits and licenses valid and up to date? Checking with the issuing agency might be a good idea if there is any question about the authenticity of the documents shown.
• The list of all assets to be sold to the buyer should be reviewed. It will be referenced shortly before close of escrow. That’s when the purchaser should investigate all of the equipment, machinery and other property of the business, to make sure it is in working order, and, if needed, properly registered and inspected.
• Some detective work on the part of the buyer also is recommended. In the case of a retail business, for example, it’s important to "case" the neighborhood to learn how many similar companies are located close enough to the business to be competitors. There usually is no single rule regarding how much competition is too much, so the buyer will need to make a subjective judgment about the possible threat posed by other nearby businesses. The point is to make sure and conduct this part of the due diligence study.
• Also of concern is that the seller holds clear title to any and all assets of the business being sold, unless disclosed otherwise. The buyer wants no surprises. Since title searches are ordinarily the job of the escrow officer, this aspect of due diligence will likely be covered. But it’s a good idea to make sure the escrow holder is experienced at handling business transfers and knows how to do this properly.

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