Clarification/Follow-up by netto on 09/30/03 2:24 pm:
Thanks for your reply.

Ok, I agree I need external professional help - big time - but who?

Is this a lawyer AND accountant? What kind of each?

Like I know there are real estate and criminal attornies, but what kind for this?

Even accountants, there are different types, right?

I don't want to just contact one that says "Oh yeah, I do that"...I want someone who does it, not just read about it 15 years ago in college.

Thanks Leo.

Clarification/Follow-up by voiceguy2000 on 09/30/03 4:31 pm:
Yes, the process should be scary, especially if you have no experience owning and running a business. I have to say that in my observation, our culture and our educational system prepares people to be employees, not owners, and there will undoubtedly be a lot of adjustments in thinking that will be forced on you.

You might want to take a look at the book The E-Myth Revisited by Michael Gerber to get some perspective on what you are about to undertake. It is available at bookstores in inexpensive paperback.

At this point, you need to work through the following steps:

1. You need to make some wise decisions on what area of business to look at. Consider whether the service or merchandise involved is something that you would be happy working with. Also consider the economic trends affecting your choices. For instance, dry cleaners were traditionally quite profitable, but many have fallen on hard times with the trend toward more casual business dress, coupled with increasingly strict environmental rules.

2. As you narrow down your choices, you will want an accountant to help you understand the financial side of the business. I would look for a small practice, with maybe 2 or 3 senior people and a handful of juniors, that has experience with small businesses. Talk to some other local businesses to get comments and recommendations. Interview 3 different outfits to get a feel for what is out there.

You want the accountant to help you understand the financial side of the business you are considering. In your shoes, I would want to see not only annual financial statements, but also the business's check register(s), general ledger, and bank statements going back at least two years. The accountant should be able to discern whether the business owner is manipulating things to make the business look more profitable, or to conceal costs or liabilities that might surface in the future.

Also confirm that all state filings and payroll remittances have been made on time and in full.

3. Once you have gotten a strong candidate lined up, a lawyer's help in negotiating the actual purchase would be helpful. As I mentioned, you should have a lawyer examine all real property issues (such as a purported sublt or assignment of leased premises). But the lawyer can also help with warranties, indemnities, non-compete terms, earnout provisions.

Again, I would look for a modest-sized law practice that has experience dealing with small and medium sized businesses. The business-oriented practices tend to be "downtown," whatever that may mean in your particular location. I would not use the Yellow Pages as a source, because the people advertising there are more consumer-oriented (criminal defense, personal injury, divorce, bankruptcy). What you want is a firm with lawyers that went to good-quality law schools and operates a business-oriented practice.

Ask for referrals through local Chambers of Commerce or trade associations. Also check to see whether a local bar association offers referrals. You can search for lawyers on the Martindale-Hubbell web site, www.martindale.com, by location, size of firm, and practice areas. If you have found an accountant you trust, that may also be a source of referral. Again, I would talk to 3 different ones to get a feel for which seems best for your needs.

Clarification/Follow-up by LEOLINGHAM on 10/02/03 7:48 pm:
When you are green in these areas,

you need to

-survey the local market for well established accountants.

-check their standings in the market

-if in doublt, go for a medium sized well
established accounting firm

even if you have to pay a higher fees,
you should get the right commercial judgement.

Legal issues are not a major factor, it
is relatively minor issue.

Normally good / established / reputed
accounting firms have good attorneys.

Avoid "one-man" accountants/ attorneys
at this stage.

Even after getting the right informations,

you should talk with

-your banker
-your good contacts [friends]
-local chamber of commerce

It needs a multi approach to satisfy
yourself.


regards

LEO LINGHAM