Due Diligence for Business Buyers
Been thinking about buying a business?
Most buyers of businesses do not research what they are buying. That means they don’t actually know what they are getting into. If you don’t know what you are buying, then on what basis can you hope to profit from the decision?
You can minimise your risk when you undertake due diligence. Due diligence is “checking out what it is you are buying.” The more you do, the better informed you will be!!
You need to undertake due diligence on what you want to buy to ensure you have access to the important information about the business you’re buying. If you don’t undertake a due diligence process you will never discover what you need to know about the business. It’s the best way for you to assess the value of a business and the risks associated with buying it.
Through the due diligence process, you will investigate aspects of the business that is being offered for sale. You will need to look at the business’s operations, its financial performance, not to mention legal and tax compliance, customer contracts, intellectual property, assets and other details, often within a time period specified in a letter of intent (LOI).
You usually conduct due diligence after you and the seller have agreed in principle to a deal, but before signing a binding contract.
The information you collect during due diligence is highly sensitive and confidential. The seller might want you to sign a non-disclosure agreement before you access this information.
This guide contains potential questions you need to ask when investigating a business you are considering buying.
For information relating to Business Due Diligence click here.
