… I should mention it’s in the UK. It’ s no big deal I suppose but we want a license the company holds because it will save a lot of time and some money.
We’re looking to do the deal tomorrow (it’s at a good price), check everything out over the next couple of days and do the paperwork asap after that …
As best I know, we go see a lawyer or accountant, the existing shareholders/directors sell their shares to us, and we become the shareholders/directors?
In addition, the Internet says we need to check out …
The company’s existing credit arrangements (on going)
The company’s liabilities/debts (outstanding)
Any pending litigation affecting the company?
Is the company tied to premises (a lease, perhaps)
License: Impact for new owners of poor compliance?
Is the VAT account in good shape?
I guess I’m just looking for confirmation we are on the right track.
It has nothing to do with asking forumers to do your homework for you. I’m talking about prevailing laws and maybe SEC regulations that stipulate the minimum amount of audit and valuation work to be done, and the minimum amount of time spent.
Um, what kind of business is it, and what is the price?
Keep in mind that many companies that are for sale are essentially worthless. The only value they might have is in the inventory. Many a buyers have been suckered into paying an exorbitant price for the “name” and reputation of the company, along with the customer list.
Of course they do - the Financial Services Authority.
But bodies like the FSA and the SEC aren’t that interested in regulating private sales of private companies. Their main focus is on financial products offered to the public, and on the doings of publicly-listed companies. Nothing in the OP suggest that either the purchaser or the target is a listed company, and clearly the OP does not envisage any offering to the public. So it’s very unlikely that FSA regulations require the OP to conduct due diligence. As far as the FSA is concerned, if he wants to buy a product sight unseen, there is no public interest which requires him to be stopped from doing so.
Okay, let’s get to the absolutely first question that has to be answered before anything else.
How do you know, and I mean really, really KNOW that this company actually owns the license you want? How do you know that someone isn’t going to come along and claim they actually hold the license and all the time and money you think you’ll save will be lost in round after round of litigation?