Mergers and Acquisitions For Dummies (72 page)

Listing of permits, licenses, and agreements of the company relating to air or water use or quality, solid or liquid wastes, hazardous waste storage or disposal or other environmental matters.

Listing and description of any environmental lawsuits or investigations

Copies of the workplace safety and health programs currently in place, with particular emphasis on chemical handling practices

A Seller concerned about possible environmental issues should hire a qualified environmental firm to conduct appropriate tests on the real estate or facility in question
before
beginning the process of selling the business.

Taxes

Not surprisingly, taxes are a major concern for any Buyer. Taxes run the gamut from income taxes to payroll taxes to sales taxes. Paying taxes drives everyone mad; not paying taxes may send you to jail! The following list outlines tax information Buyers should review during due diligence:

All federal, state, local, and foreign tax returns

State sales tax returns

All employment tax filings

Real estate and property tax filings

Copies of any tax liens

Listing and description of any pending or threatened disputes regarding tax matters

Nonpayment of any kind of tax is serious, of course, but Buyers should be especially on guard for a Seller who has not made FICA payments. Nonpayment of payroll taxes is a major warning sign for any Buyer: When a company stops making FICA payments, the owners or executives can face jail time.

Contract information

Contracts, in other words, the written and oral obligations of the company, are hugely important for any Buyer; she needs to have a clear idea before closing of what contractual commitments her new company has. This information may include

Written description of any oral agreements or arrangements

All contracts or agreements pertaining to any subsidiary, partnership, or joint venture relationship