After an indicative offer is placed and the letter of intent is signed, the next step in the business buying process is the validation of everything that was discussed. This is what is known as due diligence. Surprises are not appreciated, more so in a merger, because they cost business owners millions of dollars. To keep surprises from ever arising, due diligence is done before a business is bought. The business broker for assembly companies Orange County can help prepare for this step.
Due diligence is the analysis done by a buyer to verify the information that was provided by a seller. The objective in this stage is for the buyer to verify that they are buying precisely what they are receiving. Due diligence is crucial because once the sale is done, the new owner will acquire both the advantages and the problems of the business. So as not to lose potential buyers, the business broker for assembly companies Orange County you hire should help you get your business ready for due diligence as well as advise you on how to deal with buyers in the due diligence stage.
Most inexperienced buyers tend to accept the first option that comes their way and look for shortcuts when it comes to the due diligence phase. This happens when they have been looking for a company to buy for a long time. While such buyers will save you time and guarantee you sell fast, most potential buyers will not be inexperienced. They will come with a business broker to help with due diligence. As you get ready to sell your business, it is always good to assume that the buyer will be very thorough in the due diligence phase.
Just because you are now at the due diligence phase does not mean you share everything with the buyer. It is always good to ask why a buyer needs certain information about your business. Leaving the work to a business broker in Orange County will further guarantee you never disclose anything you are not mandated to.
At the end of due diligence, a buyer will have the following type of information:
- Facts needed to make a decision on whether to buy a business or not
- The price range of the company
- Terms and conditions of the sale agreement
- Opportunities to improve the business after acquiring it
There are findings that can cause a rupture between the seller and the buyer. The sale can fall through if the buyer realizes that the financial picture presented was not accurate, the perspectives of the company are bad, the company has high contingencies, the company depends a lot on the owner and the company requires a huge investment to get it back on track. Your business broker for assembly companies in Orange County can help resolve issues that can keep you from selling.