Due diligence is a critical procedure to assess a company that is for sale. It encompasses everything from legal to financial operational, environmental to. There are two main types of transactions that require due diligence: selling a business, and merging with or acquiring another company. Each kind of transaction can be complex, which could add time and length of the process.
Find Your Needs
The process of due diligence reveals many potential risks that could derail the transaction, so it’s crucial to consider your priorities and plan in advance. You must also consider what the outcomes of the due diligence will affect your deal and the terms you offer. For instance do you think your company is dependent heavily on just one or two customers? Do you see customer churn in the near future? Take these questions into consideration to help you establish expectations with the vendor.
Prepare to be Thorough
Individual buyers are typically less thorough than businesses when conducting due diligence. It’s partly due their personality (e.g. they might be cautious and meticulous) and also due to the fact that they depend on professional advisors, who have their own hourly rate fees. Making sure to prepare for due diligence as early as possible can increases your chances of a fast and successful sale.
To simplify communications and reduce the number of reviewers who have access to information, designate one person as the point of contact. This will help you avoid delays and ensure that all issues are promptly addressed. It will also be easier to convince the buyer that the due diligence period can be shortened if you are already prepared and organized to begin.
