Chapter 14
Confirming Everything! Doing Due Diligence
IN THIS CHAPTER
Understanding due diligence
Conveying important due diligence information
Evaluating whether to provide extra information
The Buyer conducts due diligence (a thorough review of the Seller’s books, records, inventory, contracts, and more) concurrent with the drafting of the purchase agreement (see Chapter 15). Due diligence is the “open the kimono” time when the Seller reveals intimate details of the business, including (but not limited to) financials, customer information, pricing detail, sales pipeline, contracts, and employee compensation.
In this chapter, I introduce you to the ins and outs of due diligence, what to expect, what needs to be done, and perhaps just as importantly, what doesn’t need to be done. Please refer to the appendix for a full list of information provided in a typical due diligence process.
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As you conduct due diligence it’s a good idea to begin thinking ahead to the integration phase. You’ll need a dedicated team in place to help make the transition smooth, so I recommend getting a head ...