Preliminary Due Diligence

Once a prospect survives your filters, it is time to learn even more about it so that you can decide whether to make an offer to buy the company in the form of a letter of intent (LOI)—and determine what shape the offer will take. Gathering the information to apply your filters probably took about a day’s work and, for prospects sourced through brokers, included an initial discussion with the broker after reading the teaser and CIM and, for directly sourced prospects, included interviewing the owner and reading company financials. Now, you’ll devote substantially more time to the prospect in the focused period of rapid learning, your preliminary due diligence. The goal of preliminary due diligence is not to ...

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