{"id":560796,"date":"2012-06-27T03:17:28","date_gmt":"2012-06-27T07:17:28","guid":{"rendered":"https:\/\/vrbbd.wpengine.com\/vrbbgreenbay\/due-diligence-do-it-now\/"},"modified":"2022-01-31T12:44:38","modified_gmt":"2022-01-31T17:44:38","slug":"due-diligence-do-it-now","status":"publish","type":"post","link":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/due-diligence-do-it-now\/","title":{"rendered":"Due Diligence — Do It Now!"},"content":{"rendered":"
\n

Due diligence is generally considered an activity that takes place as part of the selling process. It might be wise to take a look at the business from a buyer\u2019s perspective in performing due diligence as part of an annual review of the business.\u00a0 Performing due diligence does two things: (1) It provides a valuable assessment of the business by company management, and (2) It offers the company an accurate profile of itself, just in case the decision is made to sell, or an acquirer suddenly appears at the door.<\/p>\n

This process, when performed by a serious acquirer, is generally broken down into five basic areas:<\/p>\n

\u2022\u00a0Marketing due diligence
\n\u2022\u00a0Financial due diligence
\n\u2022\u00a0Legal due diligence
\n\u2022\u00a0Environmental due diligence
\n\u2022\u00a0Management\/Employee due diligence<\/p>\n

Marketing Issues<\/strong><\/b>
\nIt has been said that many company officers\/CEOs have never taken a look at the broad picture of their industry; in other words, they know their customers, but not their industry.\u00a0 For example, here are just a few questions concerning the market that due diligence will help answer:<\/p>\n

\u2022\u00a0What is the size of the market?
\n\u2022\u00a0Who are the industry leaders?
\n\u2022\u00a0Does the product or service have a life cycle?
\n\u2022\u00a0Who are the customers\/clients, and what is the relationship?
\n\u2022\u00a0What\u2019s the downside and the upside of the product\/service?\u00a0 What is the risk and potential?<\/p>\n

Financial Issues<\/strong><\/b>
\nTwo important questions have to be answered before getting down to the basics of the financials: (1) Do the numbers really work? and (2) Are the seller\u2019s claims supported by the figures?\u00a0 If the answer to both is yes, the following should be carefully reviewed:<\/p>\n

\u2022\u00a0The accounts receivables
\n\u2022\u00a0The accounts payable
\n\u2022\u00a0The inventory<\/p>\n

Legal Issues<\/strong><\/b>
\nAre contracts and agreements current? Are products patented, if necessary?\u00a0 How about copyrights and trademarks?\u00a0 What is the current status of any litigation?\u00a0 Are there any possible law suits on the horizon? What would an astute attorney representing a buyer want to see and would it be acceptable?<\/p>\n

Environmental Issues<\/strong><\/b>
\nNot too long ago this area would have been a non-issue.\u00a0 Not any more!\u00a0\u00a0 Current governmental guidelines can levy responsibility regarding environmental issues that existed prior to the current occupancy or ownership of the real estate.\u00a0 Possible acquirers \u2013 and lenders \u2013 are really \u201cgun-shy\u201d about these types of problems.<\/p>\n

Management\/Employee Issues<\/strong><\/b>
\nWhat employment agreements are in force?\u00a0 What family members are on the payroll? Who are the key people?\u00a0 In other words, who does what, why, and how much are they paid?<\/p>\n

Operational Issues<\/strong><\/b>
\nThe company should have a clear program covering how their products are handled from raw material to \u201cout the door.\u201d Service companies should also have a program covering how services are delivered from initial customer contact through delivery of the services.<\/p>\n

The question is, do you give your company a \u201cphysical\u201d now, or do you wait until someone else does it for you \u2013 with a lot riding on the line?<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Due diligence is generally considered an activity that takes place as part of the selling process. It might be wise to take a look at the business from a buyer\u2019s perspective in performing due diligence as part of an annual review of the business.\u00a0 Performing due diligence does two things: (1) It provides a valuable […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-560796","post","type-post","status-publish","format-standard","hentry","category-selling-a-business"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/560796","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/comments?post=560796"}],"version-history":[{"count":0,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/560796\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/media?parent=560796"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/categories?post=560796"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/tags?post=560796"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}