Due Diligence

The act of Due Diligence is a part of almost every business acquisition or merger. Due diligence occurs once a buyer has been found for your site and a price agreed upon though a Letter of Intent and accompanying negotiations.

Due diligence
From Wikipedia, the free encyclopedia
Due diligence

is a term used for a number of concepts involving either the performance of an investigation of a business or person, or the performance of an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations. The process through which a potential acquirer evaluates a target company or its assets for acquisition.

The basic intent of the due diligence process is to create an organized forum for the exchange of information between the seller and buyer. The information to be exchanged will be any business, financial, or legal documents required by the buyer to determine that the business operations, assets and business data represented by the seller during the sales process are correct to the best ability of the seller. Once the buyer is satisfied that the business for sale is as presented, the due diligence process will usually complete and include the signing of the final purchase agreement.

As a business seller, it is important to remember the following facts regarding this process;

• It is a normal business process and is common in most all business acquisitions and mergers. It does not constitute a lack of trust on the buyer's part and should not bee seen as an intrusion on your business.
• As all business sales will go through this investigative step, it is important to ensure that the information exchanged with the buyer during the sales process is as correct and complete as possible. Any mistakes or omission may be discovered during due diligence and could lead to a lack of trust between the parties.
• Due diligence will be one of the last steps before closing the sale of your business. Having your books and records organized and ready for review in advance will greatly speed the time it takes to complete this step.

For more information on the entire sales process please see our Selling Your Online Business page.