Anyone considering buying a business should engage a solicitor in Limerick who can carry out a thorough due diligence on the business target. If it is a company, certain information can be obtained from the Companies Registration Office (CRO) such as the accounts, annual returns, and company reports.

However we would recommend that you also need to ensure you have full information on the following areas:

1. the personnel of the company (employment contracts etc); understand the skills that the staff have in the company.
2. the financial operation of the business is of vital importance (three years of the company’s books and records should be made available to your accountant for examination)
3. are there any debts in the business
4. what is the cash flow of the business like (past and projected)?
5. consider the services offered and the pricing in comparison to industry standards and competitors
6. an examination of the assets of the business and the equipment will be required i.e. does the business own the property it operates from or is there a commercial lease. This will need to be examined.
7. Some equipment may have lease/hire agreements and if so you need to know what they are and to factor in depreciation values
8. the operations of the business should be looked into such as the location, suppliers, management, customer relations and insurance policies
9. is there any litigation outstanding?

Conducting proper checks when buying a business will ensure that you are free from a range of problems going forward and give you the peace of mind knowing that your business is a viable and sound proposition. For example, you don’t want to find that the agreed figure in principle is too high or discovering that there is pending legal actions.

For more information contact Roisin at roisin@rocs.ie or 061 502005

This article is general in nature and cannot be regarded as legal advice. It is general commentary only. You should not rely on the contents of this article without consulting one of our Solicitors. If you would like advice regarding how the law applies to your individual circumstances, then please contact Roisin O’Connell Solicitors.