Welcome again to the McLean and Co. Newsletter in which we discuss current taxation and business matters. We trust you find it informative.  

 

We are happy to accept new clients.  We would be happy to assist colleagues and acquaintances as new clients.

 

INDEX

1. Buying a Business- Due Diligence

2. 11 Inspirational Quotes to Start Your Week

3. Fraudulent (IRD) Phone Calls

 

BUYING A BUSINESS- DUE DILIGENCE

Due diligence is probably the most critical stage in the buying process. Many prospective buyers incorrectly identify this period as strictly a financial review but it goes far beyond that. Due diligence encompasses a far greater project and that being the complete investigation and review of the business.

One of the keys to buying a good business, comes from your ability to learn the intimate details of the business. To identify the strengths, weaknesses, pluses, minuses, growth opportunities and areas of concerns. If you do not do a flawless job of gathering information, you will not be able to complete the transaction since you’ll be uncertain about too many components of the business. 

When To Start The Due Diligence?

The investigation process begins the moment a business becomes of interest to you.   Your goal is to make certain that you uncover everything about any business BEFORE you buy it. You don’t have to meet the seller or even visit the business for your research to begin. The Internet is a tool that will allow you to investigate the business, the industry, the competition, the marketing, the suppliers, and so on.

By beginning your investigation early on  you’ll position yourself to ask the proper questions to the seller. Once you progress to the stage of an accepted offer, you will commence the inspection or financial due diligence.  This is the time when you’ll have access to all of the company’s books and records.

Once you  look at a particular business, you’ll find a number of things crossing your mind regarding the acquisition.  Keep a notepad handy at all times and log your thoughts.  You’ll have many thoughts about things “I need to check out”. Put together your checklist of what you need to investigate and how you’re going to do it along with the materials you may need from the seller to accomplish it. 

Things to keep in mind:

Allow yourself enough time:

Many sellers and some brokers will press for a very short inspection period; sometimes just days. Don’t get bullied into this - give yourself ample time to complete this part of the process. You should allow for, negotiate and not settle until you have sufficient time to finalise to your satisfaction the inspection/due diligence period.

Prepare properly:

Since you’ll have some time restrictions (you’ll only have x number of days per the contract), provide the seller with a listing of all of the materials required for you and or your Accountant to complete this exercise. No matter what you’re told, do not begin the process until they have everything ready for you.

Dealing With Surprises:

You’ll probably find some surprises, don’t panic, it’s normal. Work through them. Get clarification. Build your case. Don’t run to the seller or broker every time you find an inconsistency between what you’ve seen versus what you were told.  No business is perfect. The rule to follow is do not treat any incidents and catastrophes nor should you treat any catastrophes as incidents. If you find a major problem, get your facts in order and you can then decide the appropriate action to be taken with the seller (i.e. renegotiation, walking from the deal, etc..)

 

11 INSPIRATIONAL QUOTES TO START YOUR WEEK

 

FRAUDULENT (IRD) PHONE CALLS

IRD have reported that they've been made aware of fraudulent phone calls where the caller claims to be from Inland Revenue.

Treat any phone call as suspicious if you're:

• asked if you're aware of your refund or rebate
• told to call back on a non-0800 number
• asked to make an upfront payment to claim your refund (this is usually explained as a "transfer fee" or "donation to charity").

If you receive one of these phone calls you should hang up and not call the number back. If you have concerns call IRD on 0800 227 774.  IRD will never ask you to pay money or supply your credit card details to claim a refund.

If you've given money or provided personal details to a suspicious caller, please contact your bank or credit card provider immediately.