"As always, it is best for all concerned to approach due diligence (DD) with structure and boundaries, which means setting up some simple ground rules to start off with."
Now the deposit is sorted – the next stage in the sales process is Due Diligence.
As always, it is best for all concerned to approach DD with structure and boundaries, which means setting up some simple ground rules to start off with.
DD is the most anxious time in the process for everyone, and a major cause of a sale falling over. Don’t let this be you!
The First Rule
Define the due diligence. We find the best place to start is to ask for the purchaser’s “wish list”. Both sides should agree:
What information will be provided?
The manner in which it is provided I.E. physical, electronic, on-site or off-site.
Where will the due diligence be conducted?
When will be conducted in the sales process? Some more sensitive DD may occur after contracts are exchanged.
The people that are involved in the DD process will also contribute to and require access to the information.
Once you have agreed on the content and process, you then need to set guidelines on the time frame.
The Second Rule
Define the time frame. Sticking to a time frame is critical, and this is where so many problems occur, and sides become annoyed with each other.
When are the start and end dates?
How long is it reasonable for the vendor to provide the information?
How long is it reasonable for the buyer to review the information?
By when must the buyer ask for supplementary information?
What happens if there are material variances found?
Due diligence is a really interesting time because aside from its commercial value, it also underwrites the relationship between the vendor and buyer moving forward. We are big believers that a strong relationship is very important when it comes to training, handover, and transfer of the business. When DD has structure, boundaries, and expectations are set appropriately, it sets up an incredible business sale experience for all sides.
Selling or buying any business is intricate, challenging, and potentially extremely rewarding for both. We love talking shop so if you need assistance with your transaction – give us a call for a no obligation chat.
(m) 0401 620 918
(t) (02) 8923 2632
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(t) (02) 8923 2632