Due Diligence is Critical

Carrying out Due Diligence
After the buyer signs a letter of intent to buy the business and the seller accepts the letter, the buyer is given a specified period of time to carry out a due diligence investigation of the business.

Due diligence simply means checking out the business fully.

As the buyer, you will be able to access all the financial records of the business, look at all the facilities, equipment, staff, stock, etc. If you show a serious interest in the business, you will find the owner will give you all the information you request. The owner generally will bend over backwards to assist you and help you come to a decision to buy.

You cannot simply assume that the owner of the business will be totally honest with the information supplied to you. You need to investigate, confirm and leave nothing to chance. During the due diligence process, don't forget to make use of your professional advisers because they may pick up things you could miss.

A lot of the information you will require will be in the form of written documentation, so make sure you see copies of all relevant papers, such...

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