Buying Another Company Case Study

Client looking to buy another company.

The target company’s accounting records were weak and inaccurate.

Smith Schafer Approach

We discussed the problems with the attorney who was drafting the purchase documents on behalf of our client. It was decided to ask for expanded seller warranties regarding the financial records, including the balance sheet’s accuracy as of the date of purchase. Seller financed approximately $150,000 of the sale price, and we requested any breach of warrantee have the right of offset.

Results

Within six months, it was determined inventory was overstated by $210,000, and bank floor plan debt and other liabilities were understated by $170,000. The result was our client never paid the additional $150,000 due to the errors on the balance sheet, which the seller had warranted as accurate. No court action resulted from our client’s offset of his claim against the seller’s receivable.

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Smith Schafer has provided second to none service and value to my business and personal accounts for over 30 years. Their expertise and knowledge are unmatched by any other accounting firm I have encountered over all these years.

The relationship we have built over the years with the staff at Smith Schafer & Associates is one that can never be replaced. They are quick with helping us figure anything out, always willing to pick up the phone and walk us through any problem we are having. Also they are just all so friendly and kind!

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Smith Schafer always provides great information for our business. They are thorough with our accounting and financial planning. We have leaned heavily on them with an interpretation of the PPP Loan and COVID-19 planning. They have been instrumental in our success and are always very knowledgeable and quick to respond to any of our questions."

Smith Schafer has provided second to none service and value to my business and personal accounts for over 30 years. Their expertise and knowledge are unmatched by any other accounting firm I have encountered over all these years."

The relationship we have built over the years with the staff at Smith Schafer is one that can never be replaced. They are quick with helping us figure anything out, always willing to pick up the phone and walk us through any problem we are having. Also they are just all so friendly and kind!"

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- Custom Communication

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- Sound and Media Solutions, Inc.

 

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