Due Diligence
Simkover and Associates are chartered accountants with over 15 years of
experience inside of large corporations. Simkover's chartered accountants
have experience in a variety of backgrounds including manufacturing,
retail and non-profit sectors. With this unique structure many of our
clients have found this helpful when they are expanding their business or
when they are in a state of structural change.
Buying a business can be an arduous but rewarding process. It can take
weeks or months to complete. Because buying a business requires investing
a fair amount of money and time, it is critical to do your homework.
There are many steps involved in buying a business which include the
business plan, resources and the search, due diligence,
pricing and income tax considerations. Simkover and Associates have years of experience and
expertise to assist you in many of these areas.
For example, the due diligence area includes a critical financial
review of the target company's financial statements for the past several years,
and a review of the financial projections for the coming years.
The financial statements and projections submitted to the client by the
target company are often not audited by a reputable accounting firm, and
therefore cannot be relied upon. When chartered accountants (CA's) like
Simkover and Associates are conducting due diligence on
the financial statements and projections, we are providing the
following benefits:
- If we are asked to audit the financial results, we are providing
assurance that the financial statements (sales, gross profits, expenses
and net after-tax profit) fairly present, in all material respects, the
results of operations of the company in accordance with Canadian generally accepted accounting principles
- On this basis, we are helping to determine whether the proposed
purchase price is reasonable or excessive
- We will examine the latest interim financial statements to
determine the most recent trends in the target company
- Current trade accounts receivable and payable analysis will tell
us if we can place reliance on significant customers and/or suppliers
- Terms and conditions of current and long-term bank debt are
scrutinized to ensure that inherited loans are affordable
- Analysis of sales and cost of sales by product line to assess the
target company's growth prospects
- Recent income tax returns reveal whether there are income tax
benefits that could be utilized after the purchase of the company
- Critical contracts are examined to determine if there are
contingent liabilities that the purchaser may become responsible for
- An analysis of existing information systems will tell us whether
they are compatible with the purchaser's systems, or whether costly
conversions will be required
- Employee analysis, including remuneration levels and benefits,
lets us know whether the number of employees appears excessive relative to
the size of the operation, and whether there are expensive benefit plans
that would be difficult to remove
- Other operational analysis includes: production capacity, age and
technology of equipment, quality control, R&D costs, sales personnel and
their remuneration structure, market share and competitors, insurance
program including exposure and risk, and environmental concerns
If you are thinking of purchasing or investing venture capital into a small business, due diligence will need to be conducted. Let us do the
homework -Contact Simkover and Associates today.
Due Diligence - Simkover and Associates Chartered Accountants
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