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Timos
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In case of warranties, provisions will have to be included to deal with the liabilities under contracts that are being taken over.
Usually the seller will include some sort of a provision in his product costing to cover any unforeseen replacement/repairs included in the warranty.
For the sake of simplicity, let’s assume that the owner sold 100 units, and during a one year warranty, 5 units were replaced. The actual provision will be 5% which should be taken into consideration during evaluation.
It is strongly recommended to do a comprehensive due diligence to assess the true position of the business before you are totally committed to the deal.