Mergers and Acquisitions For Dummies (69 page)

Listing of all fixed assets, with separate lists for owned assets and leased assets

Information on the assets, including a basic description of the asset, date acquired, original purchase price, depreciation years, accumulated depreciation, net book value, and asset location

All Uniform Commercial Code (UCC) filings (any time a lender makes a loan secured by the assets of a business, that lender files a document stating it has a claim against the business's assets)

Listing of sales and purchases of major capital equipment

Listing of unpaid balances and open purchase commitments for any capital equipment

Listing of any surplus or idle equipment and the equipment's dollar value

Vehicle registrations

Consulting and service businesses likely don't have much in the way of fixed assets (desks and computers are about it). Buyers of these types of companies shouldn't expect much in the way of fixed assets.

Inventory

Inventory is another key component of a company's assets and therefore impacts the ability of an owner to obtain financing for the company. Buyers need the following information:

Listing of all items in inventory listing (by location, if applicable), including item description, item number, acquisition date, number of units, and acquisition cost

Description of practices regarding inventory aging, valuation, and obsolescence, and any methodology changes

Details of inventory reserves and/or write-offs

Details of any consigned inventory arrangements

Companies with inventory likely need the Buyer to inspect the inventory in person. In fact, the Buyer may require the Seller to conduct an inventory prior the closing of the deal.

Supplier info

If a company has inventory (see the preceding section), that inventory must come from somewhere. Therefore, Buyer needs to know all about a company's suppliers and how that company makes purchases. Required information includes

Listing of major suppliers and dollar volume of purchases from each supplier