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Buying an existing business: Assets and liabilities
 Company
assets will have the most impact on the overall value of an existing
business. Assets can include cash, contracts, receivables, inventories,
and physical property and equipment. Carefully examine the condition
of the assets, as current market values may differ from the initial
cost of items. Things like old receivables may become your bad debts
and outdated equipment can be costly to replace.
Liabilities include mortgages, outstanding loans or
liens, unpaid taxes and any other obligations, such as accounts
payable to suppliers. If the property is included in the deal, what
are the lease or mortgage terms? Review any accrued liabilities
with extreme caution. Legal advice is worth the cost, especially
if you agree to take on some of the liabilities. Are there any lawsuits
pending? Make sure there are no ugly secrets ready to jump out and
surprise you in the future.
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