The best first step is to sign a confidentiality agreement that will protect both sides from any disclosures. Your friend will need to share their books (P&Ls, Balance Sheet, Cash flow, etc) with you in order to do a full analysis of the value of the business. A review of their business tax returns will also help you establish whether their book-keeping is being reported accurately.

If the initial review of the books look good, then hire an experienced attorney and/or CPA to perform reviews of UCC (lien) information and all other "due diligence" activities. A good attorney will be able to walk you through the process.

Good Luck!

Ehren Koelsch
Mira, Inc.
303-242-8930
www.miraretail.com