Chapter 12
Due Diligence on the Sell Side
In This Chapter
Understanding why sellers have to do due diligence
Identifying the three stages of due diligence
Making an informational game plan
Gathering information on your own company
Valuation is an important part of the reality check every seller should make. Think about it — examining your own company without bias is tough. That’s why you need professionals to focus on that. The bottom line is that a potential seller absolutely must conduct thoughtful due diligence months — and preferably years — before the business goes on the market.
Due diligence means investigating your company with the cold eye you’d bring to any target. For anyone doing the job, it involves reading everything, asking plenty of questions inside and outside an organization, and generally leaving no stone unturned in finding out what makes a company tick and how much it’s truly worth. It involves not only basic research and calculations but also the ability to forecast how a company will do years from now.
This chapter focuses on the soft and hard skills necessary to value businesses successfully before you sell.
Looking at Why a Seller Has to Do Due Diligence
Due diligence is a process in which you ask for and obtain as much timely and accurate information about an organization as you can get so you can thoroughly evaluate a transaction. When people say to “do your due diligence” about something, they’re essentially telling you to do your homework before you ...
