Buying a Business is a Process, Not an Event...and the Due Diligence is Crucial!
You've located an exceptional acquisition target which, once acquired, will expand your company's product line and nearly double your company's annual revenue. Looks can sometimes be deceiving so it's imperative you know exactly what you are buying, should you choose to complete the acquisition.
There are a multitude of components involved in a comprehensive due diligence plan. Are you buying the company using an asset or stock purchase agreement? Are there contracts in the corporate name that are void on assignment? If so, what impact will that have on the revenue? Is there any outstanding litigation? How about potential or threatened litigation? Are there employee issues? Any worker's comp claims? Are employees paid on the books, off the books, or some combination? Does the company have documentation reflecting all employees have the legal right to work in the United States?
What about intellectual property? Does the company own any patents, copyrights, trademarks? Does the company own its website, or does the web designer own the copyright? What about the company's domain name? Does the company have any license or franchise agreements? What about other types of agreements -- supplier, customer, vendor?
Many people think of due diligence as strictly financial analysis. However, there are many more aspects of the business that must be addressed during the due diligence process in order to discover or uncover potential issues and liabilities. It can be a time consuming and tedious process to compile and organize all the data, but due diligence is one step in the transaction that should not be glossed over. What are you buying? A comprehensive due diligence process should answer that question. Contact us today to discuss how we can help you with due diligence assistance.