Article: The target should be willing to hand over audited financial statements for the past five years. If the company is publicly traded, it should file financial statements with the Securities and Exchange Commission (SEC). They file 10-K statements each year and 10-Q statements quarterly, which you can obtain online at the EDGAR website. If the company is private, you still want their audited financial statements. You'll want to use five years' worth of statements to create a trend line comparison. This allows you to see whether the company's finances are improving or deteriorating. The financial statements should also include a cash flow analysis. This report shows the sources of cash and why it is used. Confusing financial statements are a red flag. You should probably avoid buying a target whose statements you can't understand. Instead, look for clean and clear financial statements. You might need help reading the financial statements. If so, you should hire an accountant. You can find an accountant by asking another business or contacting your state's accounting society and asking for a referral. If it has, you'll want to know about these earlier sales efforts. Ask the target why the sale fell through. It's also a good idea to ask why they are selling in the first place. For example, the owners might want to start a new business in a different industry, or they may want to retire. Those are good reasons. However, the business might be losing money. If so, then the owners could be trying to get out before going bankrupt. You'll want to avoid a company that's losing money unless you know how to turn things around. If the company is publicly traded, you can find this information on the stock exchange. This is the amount it costs to buy a share of the company. If you want to buy all of the shares, multiply the total number of shares by the share price. If you want to buy only a majority stake, then multiply a majority of shares by the share price. However, you should assess whether you think the market is over- or under-valuing the company based on your analysis of its financials and other fundamentals. Also check the share price over time and consider whether the share price has been recently inflated. It's not unusual for a target to try and inflate the price when it anticipates being bought. If you are buying a private company, then there is no purchase price on the market. Instead, the purchase price will be whatever the owners want to sell for, so be sure to ask. You'll still need to analyze the price based on the company's assets and liabilities, which is discussed below.
What is a summary of what this article is about?
Ask for audited financial statements. Check if you can understand the statements. Ask whether the company has been up for sale before. Research a public company's purchase price. Ask a private company for its purchase price.