Records worth requesting before you commit
Start with the money: several years of tax returns, financial statements, bank statements, and sales records, compared against each other rather than read separately. Ask for a list of customers and suppliers with the share of revenue each represents, since a business that depends on one account carries a different risk. Request the lease, every material contract, equipment lists, licenses and permits, insurance policies, and employee rosters showing pay and classification. If the business holds trademarks, a website, or customer data, confirm who actually owns them; sometimes they sit in the owner's personal name. Gaps in the records are themselves a finding worth discussing.
Liens, taxes, and contracts that may not move
Run searches for UCC financing statements, judgments, and tax liens against both the company and the owners, so you know what must be paid off at closing. In an asset purchase in New York where the seller collects sales tax, the buyer generally must notify the state tax department a set period before paying for or taking possession of the assets, and may need to hold back funds if tax is reported due; otherwise it can become responsible for the seller's unpaid sales tax. Read each key contract for assignment and change-of-control clauses, because a lease or supplier agreement may need consent or may terminate on a sale. Liquor, health, and professional licenses often cannot simply be transferred, and new applications take time. Check for pending lawsuits, wage complaints, and government inspections that could follow the business to you.
How the checklist shapes the deal
What you find should feed directly into price, structure, and the purchase agreement. An asset purchase may let you leave certain liabilities behind, while a purchase of shares or membership interests usually brings the history along, which calls for stronger representations and indemnities. Some buyers ask for part of the price to be held back or paid over time, so problems discovered after closing can be offset. When we review a checklist with you, we tailor it to the industry, flag which items must be resolved before signing versus closing, and coordinate with your accountant on the financial review.
