Negotiation

Due Diligence – Resources to Get You Started

Due diligence can be an overwhelming experience – but the more effectively you go through this phase as a buyer or seller, the less risk for both parties.  There is a wealth of information you will want to know, and over the next few weeks, we will be adding more tools and content to help you navigate this stage.

To get you started, we’ve rounded up some of our favorite web articles and resources. This will help outline the path you will likely go down, and give you an overview of the things you will need to be looking for.

For buying or selling a business in Canada, the BDC has great articles on due diligence here and here.  Many of these principles are applicable regardless of where you are.

Not all of due diligence is about the business risk – some of it is about your personal risk and fit.  It is important to continually be assessing if a business is right for your skill set, motivations, and other requirements. On the other side of the deal, it is important to assess if a buyer has the right skill set, motivations, and financial ability to buy your business. Read more here.

Dejardin has also put together a great checklist of items to consider when conducting due diligence on a business. 

Not all businesses are the same.  Some areas will require some additional in-depth due diligence depending on the businesses. If you are interested in acquiring a tech company, there is a great resource from the folks at Synopsis. Click here to learn more about their M&A Due Diligence Checklist.

There is a flow to due diligence, and often it can be confusing to know what comes when.  CEO Hangout has a great article outlining the steps involved in due diligence when purchasing a business and the order the steps typically happen in. 

  When conducting due diligence it is important to engage trained professionals to examine the business (or buyer) you are interested in.  They will be able to spot any red flags in the documentation they review, as well as identify if any information is missing. Though it may be tempting to forgo the additional expense, the payback from this investment is significantly reduced risk and a stronger negotiating position. In the end, the best situation is a win for both the buyer and seller and a well executed due diligence is a key factor in a positive outcome.

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