Buying into a Flagstaff business? Checks to run before you sign

Downtown Flagstaff storefront, checking a business before buying it with a private investigator

Flagstaff's economy leans heavily on visitors, and that shows in what gets bought and sold: restaurants, motels, outfitters, gift shops, coffee places, rental operations. Some of these change hands because an owner is retiring. Some change hands because the numbers stopped working and the seller would rather you found out after closing.

A lawyer and an accountant should be on any business purchase. A private investigator fills a different gap. They look at the people involved and the public paper trail, and they go and see the place for themselves.

What the paperwork will not tell you

A seller's package usually includes financial statements, a lease, an equipment list and a story. The accountant tests the numbers. The lawyer tests the contracts. Nobody, by default, tests the story, and the story is often where trouble hides.

Questions like these come up often:

Has the seller, or the entity, been sued by suppliers, landlords or former employees?
Are there judgments the seller has not mentioned?
Has the same person opened and closed several similar businesses in a short time?
Is the seller the actual owner, or is someone else on the filings?
Does the business actually do the trade the seller claims on an ordinary Tuesday in February?

Records a private investigator will check

Entity filings. The Arizona Corporation Commission keeps an online entity search for corporations and LLCs. It shows who formed the company, its statutory agent, its principals and its status. A mismatch between the person selling and the people on file is a reason to ask more questions, not necessarily a red flag, but it should be explained.

Court records. Civil lawsuits in Coconino County are filed either in Superior Court or, for smaller amounts, in the Flagstaff Justice Court. Both are at 200 North San Francisco Street. An investigator will search both, and also look at other Arizona counties and federal court if the seller has history elsewhere. Small claims and justice court cases are often where unpaid supplier and landlord disputes show up first.

Judgments and collection. If a creditor has a judgment against the business or the owner, there may also be debtor examinations or garnishment filings in the case file. In justice court cases, A.R.S. 22-524 lets the winning party have the debtor examined under oath about assets. A buyer would want to know that has happened.

Property and recorded documents. County records can show liens and other recorded claims against property the business uses.

Licensing. Some businesses depend on licences, a liquor licence for a restaurant or bar, for example. Confirming the licence is current and held by the right party is a basic check.

Looking at the place itself

This is where a local private investigator earns their fee. Flagstaff is seasonal. Summer is busy, ski season is busy for some businesses and dead for others, and the gap between them can be long. A seller who shows you the business on a July Saturday is showing you the best day of the year.

An investigator can visit across different days and times, note customer counts, check whether staffing matches what the seller says, and see whether stock on the shelves looks like the inventory list. These are observations, not audits, and they should go to your accountant as context.

They can also talk to people. Neighbouring business owners, former staff and suppliers sometimes say things a seller never would. Interviews have to be honest about who is asking, and nobody can be made to talk, but people often do.

Taking on a partner

The same checks apply if you are bringing in a partner or investor rather than buying. Prior businesses, lawsuits, judgments, bankruptcies and how previous partnerships ended tell you more than a confident pitch over coffee downtown. If the person is new to Flagstaff, the investigator will look at where they came from too.

What a good due diligence report looks like

You want a short summary up front: what was checked, what was found, what could not be confirmed. Then the detail, with record numbers and dates so your lawyer can pull the originals. A good report separates facts ("a 2023 civil judgment in favour of a food supplier") from impressions ("the dining room was a quarter full on three weekday lunch visits").

Hiring in Flagstaff

Check the investigator's DPS licence yourself on the Public Services Portal; our guide to verifying an Arizona private investigator licence shows how. For a broader look at the work, see what a private investigator does and does not do.

The Flagstaff private investigators page lists private investigators in town, each a member of the Arizona Association of Licensed Private Investigators (AALPI). The Flagstaff town page has our other local guides.

Give yourself time. Ask for the investigation before you sign a letter of intent with a short exclusivity window, so the findings can still change the price or the deal.

See the board: everyone in Flagstaff.