Who Deals with the Accounts Receivable?
Chances are, some of the customer will owe the seller money on the closing date. Who will be responsible for collecting these overdue debts? There are only two ways to handle this: either you purchase the accounts receivable at closing (for a discount, to reflect the fact that some of these folks wont pay up), or you let the seller collect them at his leisure. My vote is for you to buy the accounts receivable at closing that way if the delinquent customer wants additional work done after the closing, youre in a stronger bargaining position. Can You Assume the Sellers Lease? Is the seller leasing the premises where he conducts his business? If so, you should find out (1) how much time remains on the lease term, and (2) whether the landlord is willing to let you assume the sellers lease as is, without an increase in rent. If the lease has only two years or less to run, you might want to spend the money now to negotiate a brand new lease with a five to 10 year term. Also, find out if the
