Purchasers Due Diligence On Management Rights

Your verification and valuation advisers need to be willing if necessary to deliver a report that says what the business is truly worth, not just deliver a verification report and resulting value that agrees with the business or finance broker or seller. This is to protect you from the risk of spending years of your life working off the debt of an overpriced business, or worse.

Purchasing a new Management Rights Business - A word to the wise.

1. It is very important you communicate with your legal and tax advisers in the early stages of purchase

Issues requiring immediate thought and resolution include:

• Business structure establishment / review and asset protection advice
• Purchaser due diligence investigation and reporting
• Provision of information required by your financier (including financial reporting for existing businesses as required).

We can assist you through the purchase research phase by:

• visiting the complex
• reviewing the vendor’s records
• providing you with a detailed report of our findings.

We have strong but arms' length relationships with many financiers in Brisbane and on the Sunshine Coast - to ensure you get appropriate finance at the best rates.

As a business with a team of senior professionals, with a depth of experience in a range of businesses and firms, we are able to bring a level of business acumen and depth of support that is often hard to get from many of the coast only or sole operator firms.

This business acumen is important when you are making deals with third parties like business brokers, finance brokers, bankers, etc., or making a major decision like buying, selling or refinancing. We help you get fair value from the deal.

2.  Be wary of some valuation or due diligence contractors referred to you by some business and finance brokers

The vast majority of finance and business brokers are reputable obviously.

However an unscrupulous business or finance broker may want you to finance and buy a business - no matter if it is priced.

So for your sake your verification and valuation advisers need to have the courage, if necessary, to deliver a report that says what the business is truly worth, not just deliver a verification report and resulting value that agrees with the business or finance broker or seller.  

This is to protect you from the risk of spending years of your life of working off the debt of an overpriced business, and to protect the industry or region from a valuation bubble - and a resulting collapse in pricing.

We recommend that if you don't use Ascendia Accountants you at least use a firm that is not highly dependent on the referrer or one of the other parties in the deal (your finance or business broker or other party) for their business success.

Understand that there can be considerable economic dependency and obligation on the specialist management rights valuation consultant or home-based accountant to do what is needed to get the prospective purchaser to buy - and the finance broker to be able lend on the deal - whether it is really a fair deal to the purchaser or not. This is because some specialist due diligence providers rely on referral of the work from the business or finance broker - and if the reports are not supportive of the deal / price - the brokers are not likely to want to keep referring the work to the accountant / valuer...

So before using a due diligence / valuation provider - it's only common sense to ask yourself:

• Does this specialised valuer / due diligence provider depend for their livelihood on repeat referrals from a small number of brokers or a specific finance or business broker?
• Is the valuer in any way obligated to the finance or business broker?
• What is the business relationship between the referring business or finance broker or bank and the valuer/due diligence service provider - are they in business together in some way? Are they cross-promoting their services?
• Is the valuer or due diligence professional truly independent of the referrer?
• What influence does the referrer have over the valuer?

A truly independent Purchasers Due Diligence report will enable you to be assured you are paying fair price for the business, or to assist you to negotiate a better price from the seller if needs be, and so give you the best opportunity to enjoy your time in the managment rights business.

3.  What assurance do you have that Ascendia gives fair and frank, independent advice to you about a management rights businesses value, and whether you should buy that particular business?

Ascendia provides services to a variety of businesses not just to management rights operators. As a result our business is dependent on maintaining a long-term relationship with a range of clients over a number of years.

We provide services to Management Rights Operators throughout the life cycle of their business - beginning, middle and end - not just at the beginning.

As a result we cannot afford to act in a way that compromises a Management Rights Operators interests in the future in favour of a potentially unscrupulous business broker or finance broker who may have referred you to us.  

We want and need our Management Rights clients to succeed each and every year - so we want them to buy at the right price.

Perhaps your major reassurance that Ascendia will do the right thing is because our clients can vouch for our service. We can provide additional references for you to speak with some of our clients in the Management Rights business - or you can consider the client testimonials available on this site. 

We have an ongoing presence in the business community because of the range of clients we service and we maintain our membership of professional bodies and adhere to their standards (like CPA, IPA and CA).