Selling Your Startup

14The Due Diligence Stage

There is no gentle way to say it: Due diligence is hell.

By this point, you've come a long way. Yet, there is still a distance to go in this process, and the due diligence stage can be one of the longest phases—and the most grueling.

If you are fortunate, you may be one of the few who sees this time blaze by in a few weeks, and you could be moving on to a whole new phase before you realize it. In other cases, this period can be drawn out for many months or even a year or more. Hopefully, you'll land somewhere less than that.

If you thought due diligence for fundraising was a pain, or if you thought it was a lot of work shopping your business around finding a great potential buyer and negotiating the terms, then get ready for that pain and work on a whole new level.

For those who have gone through the process of getting a mortgage to buy a house, it isn't too different in workload and theory. At first, you are consumed with finding the right home to buy. Once you think you've nailed that, you have all of the back-and-forth negotiations. Then, you finally get an offer accepted.

But instead of being able to finally breathe and relax, the real work is just beginning. Due diligence is necessary to validate and prove everything required and be certain that the value of the collateral is there. This can lead to last-minute glitches, delays, and renegotiations. Before the closing happens, there can be a lot of sleepless nights and stress.

This experience can ...