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Things you must consider before buying a business

Whether you are buying a business in Maryland outright or just going through with a merger, there are a number of important things that you need to consider. Be sure that you do your due diligence and that you understand the legal side of the transaction before it is complete. Below are a few examples of important points to keep in mind, though, this list is not exhaustive.

First of all, you just want to be sure that you know where the company you are buying has property. This could include storefronts, production plants, warehouses, offices and much else. Additionally, you need to know where that property is owned -- and where you'll have to pay taxes on it -- and where the real estate is just being leased.

Next, you need to fully understand the financial position that the company holds. Look up all of the assets and all of the debts, balancing them together to see where the company stands overall. It may also be wise to have a credit report done so that you can see the credit score, which has a lot to do with the borrowing power of that company.

After that, look into the inventory that the company has on hand and the contracts that may already have been signed. What contracts and purchase orders are you going to have to fulfill, and is there enough inventory to do so? If not, does the company have the ability to create more inventory in time? This helps you because you won't accidentally step into a difficult situation where you cannot fulfill your new obligations.

Source: FindLaw, "Buying a Business: Due Diligence Checklist" accessed Jan. 30, 2015

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