Due Diligence 101

The process of buying or selling a business can be a long process for both sides of the deal. Many times owners don’t know how to do a proper valuation or go through the process of due diligence. Taking the time to analyze all financial reports and legal documents will put a seller in a better position for selling the business.

What is Due Diligence?

Due Diligence is the process of going over the financial and legal aspects of a business to sell a company. A business that is looking to prepare for a sale, should consider hiring advisors to make the proper due diligence, since it can become time consuming for just the owner to do it.

Why is it important?

Going through this process will help identify any liabilities of the company and will prevent any buyers giving wrong valuations for the business. The information gathered will help the advisors make an offer to the buyer and will give both the seller and the buyer an overview of the true value of the business.

Due Diligence Essentials

-Operational Documents

-Financials

-Contracts

-Employment Agreements

-Intellectual Property

Due diligence will help both parties reduce costs and will prevent the buyer from undervaluing the company, if the process is done right, as a business owner you will be more likely to sell your business.

To read more on due diligence, click on the article below:

Preparing Your Company for Sale: Due Diligence from a Seller’s Perspective