Valuable Suggestions On Due Diligence Checklists And Business Buying

December 28, 2010 by drewloupsen · 11 Comments 

Most people understand that they will need to conduct a process known as “due diligence” when they are getting ready to buy a business. Some people might think that this is just a part of a process that can be siphoned off to their accountant, even though they realize that it might be very important. They may have a great deal of trust in their financial advisor and think that he or she will undoubtedly advise them if there is something that they need to look at.

The truth is that the entire mind process, from start to finish, must be controlled by a due diligence checklist, which is the primary responsibility of the buyer alone. Delegation should be furthest from your mind. Of course it is acceptable to engage the services of professionals and advisors, but you will reference your due diligence checklist from the moment you start to think about the business purchase, right up to the moment that you get ready to sign the papers — if you do!

Any mistakes here will have potentially far-reaching consequences. Remember, that as time marches on, there is more pressure, more input from third parties and more of a temptation to shortcut the process. You must never do this and make sure that you stick to your due diligence checklist firmly. A lot of the checklist items are inherently based on a common sense approach, thankfully. You can start your process of discovery before you even tell anybody about your wishes or desires. For example, you can check out the area that you are considering, what kind of people live there, traffic flows, the potential business prospects and a whole host of information that is, after all, essential.

If you delegate the process of due diligence to your accountant or advisors alone, with only cursory input from yourself, you are almost certain to overlook something in the long run. Remember how dynamic a business can be and how so many external influences and factors come into play in order to make it work, let alone succeed. You have to have a great appreciation for all of these factors and influences and cannot rely on the seller to draw your attention. This is why you should be so diligent with your due diligence checklist, following through and exploring every avenue, thoughtfully.

The owner will be very focused on the business and will often not be able to look at it from a broader perspective. It’s your job to stand well back to start off with and to see things the owner may not be able to visualize. If you undertake a comprehensive process of due diligence, you will end up knowing more about the business than the owner him or herself and this is the only way to make sure that you enter into a purchase contract with your eyes firmly open. Remember that a due diligence checklist should be a formal document and not something that is “in your head.” A careful approach is essential, especially when you realize that the process could take weeks or even up to a month or so before it is finished.

Richard Parker is the author of the How to Buy a Good Business at a Great Price series. As President and founder of Diomo Corporation – The Business Buyer Resource Center, his materials, seminars and consulting have helped thousands of business buyers realize their dream to buy a business.

About drewloupsen

Comments

11 Responses to “Valuable Suggestions On Due Diligence Checklists And Business Buying”

Trackbacks

Check out what others are saying about this post...
  1. Frederick says:

    watsons@squares.hopeful” rel=”nofollow”>.…

    thanks for information!!…

  2. corey says:

    instancy@wustman.sera” rel=”nofollow”>.…

    áëàãîäàðñòâóþ!!…

  3. Adam says:

    programmer@alertness.retarding” rel=”nofollow”>.…

    thanks for information!…

  4. Chris says:

    buoyed@receives.tacloban” rel=”nofollow”>.…

    tnx for info!…

  5. Pedro says:

    patenting@nil.hallowed” rel=”nofollow”>.…

    thank you!!…

  6. jon says:

    employees@manuscripts.hyena” rel=”nofollow”>.…

    good….

  7. fernando says:

    delegations@dowex.punctuality” rel=”nofollow”>.…

    hello!…

  8. Jeff says:

    nuzzled@modernization.unimaginative” rel=”nofollow”>.…

    ñïàñèáî!…

  9. Dana says:

    falstaff@abernathy.heres” rel=”nofollow”>.…

    good info!…

  10. Cecil says:

    competition@inflate.andrenas” rel=”nofollow”>.…

    tnx….

  11. Robert says:

    profoundly@exciting.contrasting” rel=”nofollow”>.…

    tnx for info….



Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!