Here are some guidance points for running a due diligence process on a business you are planning to purchase.
Plan the process – Create a plan/timeline identifying who will be doing what. Stick to areas that are most likely to have any effect on the final sale agreement.
Employee issues – make sure that the due diligence process picks up any issues relating to the seller’s employees. Are any past or present employees litigating against the business?
Identifying issues - spot any issues as early on as you can so that the appropriate warranties and indemnities can be quickly put in place. Focus on larger issues first.
Work closely with the solicitor – lack of communication between the buyer and solicitor could result in the process failing.
Discuss key issues of concern with the solicitors.
Company culture is important too! – Ask your management to look into the target’s company. Compare the management styles and core values of your business and the target business
Collect information, before analysing - These are two separate activities within the due diligence process.
Don’t allow time to be an issue - be focused and don’t take shortcuts in order to reduce costs, you could end up spending more time and money over it in the long run otherwise.
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