My company is buying the stock of another company? What should I be looking at as part of my tax due diligence process?
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Tax Professional Answers
William Rogers, CFP, MBA, EA
First and foremost, I would recommend that you review the historical financial statements of the target company if they are available. I recommend at a minimum to review the previous five years. The purpose is to understand the underlying trends. Is the company profitable? What is the growth trajectory? And, is the company generating positive cash flow and does it still require substantial amounts of outside capital? After a thorough financial statement review I would then ask to review the valuation so that you can understand is the company paying a premium, or paying fair value for the stock?Leave a Comment 50 weeks ago