Able Investigations

Due Diligence Examinations
Three Crucial Factors Required:

1. Preparation Is The Key.

In order to conduct a thorough investigation you must have everything in order before the due diligence process begins . In fact, you must start your due diligence preparation and information gathering the moment you decide that you are interested in a particular business.

You must arm yourself with:
• a detailed listing of the exact due diligence steps to follow
• a checklist of everything to complete in each due diligence area
• specific due diligence tasks that need to be completed
• all of the materials you need from the seller before you start

2. Allow Yourself The Time You Need To Do It Right.

Most sellers will try to have you agree to short financial review period; some as little as ten days. This simply does not make sense. There isn’t a business in the world where you can learn what you need to know in 10 days.

Unexpected problems are the last thing that sellers want to deal with at this stage.

Are they hiding something? Are there secrets if they want to limit your due diligence time? If the business is as good as they say it is, wouldn’t it make sense to let you take your time so that you are certain to buy?

We recommend that you need a minimum of 20 working days, a full calendar month, for a complete due diligence investigation. If the seller won’t agree to this, it’s a clear warning sign. And, if at the end of this period you still need time then get it. You cannot move ahead with a deal simply because you ran out of time for due diligence. Do not give in on this.

3. There’s A Lot More To Every Business Than Its Financials and go far beyond a Dun and Bradstreet Report

Although the financial history of a company is very important and you want to be certain the seller hasn’t “cooked the books”, a proper due diligence goes far beyond the financial analysis. Many people get trapped looking solely at financials and completely forget about the other key areas to be reviewed. It’s a recipe for disaster! If the numbers check out then great but there’s a whole lot more that can cause problems later on that must be investigated.