Due diligence includes everything from financial and legal investigations to a review of specific information regarding how a business is run. A key goal of the due diligence process is to identify problems, such as liabilities and contractual issues to ensure that the business selling price is justified. When approaching the due diligence stage of a purchase, here are some things to consider.
Trademarks and Copyrights
Will assets like trademarks, patents and copyrights be transferred? Trademarks, patents, and copyrights are often essential parts of a business and cannot be overlooked.
Products and Industry
Ensure all product lines and manufacturing processes are up to standard as buyers will be looking for age and value of the equipment, information about suppliers etc.
Current statements, incoming sales, balance sheets and all financial information in general will be carefully reviewed. Is there bad debt? Is there work in progress? These kinds of issues will be evaluated.
You should be prepared to share lists of major customers and comparative market share to competitors.
Buyers will want to identify key personnel, data on any employee turnover and any staffing issues. It is important to fix staffing problems that interfere with a buyer’s ability to run the business.