Johnson, Gene H.; Lindbeck, Rudolph S.; Winston N. McVea Jr.
January 1994
Journal of Financial Planning;Jan1994, Vol. 7 Issue 1, p38
Academic Journal
When a client is considering buying a small business, the financial planner must alert the client to potential traps that can distort the true value of the business. Examples in this article include overreliance on misleading tax returns, unenforceable noncompetition agreements, hidden workers' compensation claims, and a variety of little "scams." Potential purchasers and their advisors need to perform a thorough investigation and analysis of the target business. Reasonable care in the exercise of the investigation and valuation of a business is important, though it cannot guarantee that all problems will be avoided.


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