Buying & Selling a Business

Pooling of interests is an accounting method for reporting acquisitions accomplished through the use of equity. The combined assets of the merged entity are consolidated using "book value", as opposed to the Purchase method, which uses "market value". The merging entities financial results are combined as though the 2 entities have always been a single entity.

Yes. www.appraisers.org. The American Society of Appraisers (the “Society”) is a multi-discipline non-profit international organization of professional appraisers (valuers). The mission of the Society is to foster the public trust of our members and the appraisal profession through compliance with the highest levels of ethical and professional standards. The American Society of Appraisers:

Bulk sales tax is a tax paid by the buyer on certain tangible assets including furniture and fixtures.

Generally speaking, when we are dealing with privately held businesses, it is not recommended to acquire the corporation of a seller. When you acquire the seller's corp, you are inheriting the seller's hidden liabilities that could exist including sales tax, payroll taxes etc. Also when you purchase the sellers corporation, you have nothing to write off because you are buying "stock". For this reason, most privately held businesses are structured as asset acquisitions.

A secured creditor is a creditor that has filed a UCC form against certain assets which says in the case of your default, he has first rights to those assets. In real estate a mortgage is filed to secure the creditor. Banks always want as much security as possible. Try never to secure a purchase of a business with your home.

Quite often, a seller of a business is willing to hold a note for a portion of the business purchase. When the seller holds paper or this note, the purchase of the business is facilitated since the buyer does not have to go to traditional lending sources.

The CPA usually is involved with the allocation of the assets to the purchase price. When a business is acquired, the business being purchased can include various assets including machinery, inventory, fixtures and intangible assets. The allocation of these assets is important because certain assets can be depreciated or written off faster than others.

Valuing a business is a tricky process with the end result being to ascertain the fair market value of the business. Fair market value is the amount at which the property would change hands between the buyer and seller when neither are under compulsion to buy and when both have reasonable knowledge of relevant facts concerning the business. You can use the Asset Approach to determine a value indication of a business's assets and or equity interest. This method is based directly on the value of the assets of the business less liabilities. Goodwill is determines as total sales price minus the estimated assigned asset values. The asset approach is appropriate when the profits of a business are small in comparison to the assets employed to generate that business's profits. Speak to your local CPA or business broker for more information about valuing a business and on your pending purchase or sale.

Valuing a business is a tricky process with the end result being to ascertain the fair market value of the business. Fair market value is the amount at which the property would change hands between the buyer and seller when neither are under compulsion to buy and when both have reasonable knowledge of relevant facts concerning the business. The income approach is generally used when valuing small closely held businesses. When using this approach, you can determine the value of a business using one or more methods where you convert the anticipated benefits of owning the business. To find the fair market value under the income approach, divide the after tax value by the capitalization rate,(capitalization rate is the Net operating Income divided by the purchase price expressed as a percentage). Speak to your local CPA or business broker for more information about valuing a business and on your pending purchase or sale.