Due Diligence is vital when you are considering purchasing a business to ensure that you have accurate information about the business you are purchasing and allows you to evaluate the opportunities and risks of the business.
The three main categories of a due diligence are legal, financial and commercial. In preparing the Due Diligence some of the things we will review are
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Legal – legal structure, purchase agreement permits and licenses are up to date, lease agreement, impending litigation
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Financial – examine the company’s balance sheets, cash flows, income tax returns and annual reports for the previous three years
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Commercial – compare the company’s position relative to rival businesses and assess their potential threats to its survival and profitability
We will also ask key questions, including, how do we buy, structure and pay for the
acquisition? Investigating the business’ current practices in process and policies.
Preparing a due diligence will provide detailed information about the business and allow you make an informed decision