Buying Another Company Case Study

Client looking to buy another company.

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 and it was decided to ask for expanded seller warranties regarding the financial records including the accuracy of the balance sheet 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 under stated 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 clients offset of his claim against the sellers 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 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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