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Taking Over Remaining Balance of Payments on Assets

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Question:
How can I get the value of assets required for the business, such as transportation business? What is your take on taking over the remaining balance, payments on assets?

Answer:
You raise a very good point; however, the question is why you need the valuation specifically? Is it to secure financing? If so, most local dealers can be of assistance to you or the lender. On the other hand, if you simply want to learn if the assets you may be acquiring are worth what they're on the books for, then you may want to look at it from another angle which is to determine the road worthiness of the vehicles and tractors and other equipment to determine when they will need replacing. You must also investigate the maintenance records of each asset.

Many prospective business buyers have an incorrect view of the business' assets. I believe that the assets are nothing more than a vehicle (pardon the pun) to generate revenue. That is why you need to learn what the replacement costs are and when you'll be faced with making them as this can severely impact your cash flow.

Insofar as taking over payments on assets it really depends on the business deal itself. Usually, you're far better off to complete the purchase as an asset sale, and get all the assets "free and clear" which will allow you to step up the value of each and depreciate them again as long as the purchase price is allocated properly (your accountant can assist you with this point). You may not enjoy the same depreciation schedule if you just take over the payments.

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Richard Parker author of: How To Buy A Good Business At A Great Price(TM), the most widely used reference resource and strategy guide for buying a business. He has purchased ten businesses in his career and has helped thousands of prospective buyers worldwide learn how to buy the right business for sale. He is also founder and President of Diomo Corporation - The Business Buyer Resource Center. Richard Parker is also the author of BizQuest's Business for Sale Blog

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