Chapter 14
Confirming Due Diligence
IN THIS CHAPTER
Spelling out the key aspects of due diligence
Explaining how the company should be run while the due diligence process is ongoing
Evaluating whether to provide extra information
A 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 “pull back the curtain time” when the seller reveals inti mate 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.
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As you conduct due diligence, begin thinking ahead to the integration phase. You’ll need a dedicated team in place to help make the transition a smooth one, so I recommend getting a head start on that important step.