Your Due Diligence Checklist, When You Buy A Business For Sale
Most people understand that they will need to conduct a process known as "due diligence" when they are getting ready to buy a business
. They may have heard that this is a vitally important step in the process, yet they may think that they should delegate it to their accountant. They may feel that they can trust the accountant to inform them of anything untoward and deal with these matters at that time.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. None of this can be delegated. 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!You cannot afford to make any mistakes during any part of the process. 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. The good news is that the majority of items on your checklist stem from a common sense approach to revelation. You can start your process of discovery before you even tell anybody about your wishes or desires. Start to check the prospects, look at area demographics, traffic volumes and flows and other information that is fundamental to the very concept of business in the first place.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. A business is very dynamic and is dependent on so many external factors and influences in order to survive, let alone prosper. It is your job to understand every single one of these external influences and you cannot rely on the owner alone to alert you. You simply need to leave no stone unturned and apply a concerted thought process as you construct your due diligence checklist.Understand that the owner is totally immersed in the business and may not be able to see the forest from the trees, as the saying goes. 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." Approach this process methodically and remember that, to be most effective, the process is likely to take at least a month or more to complete.Your Due Diligence Checklist, When You Buy A Business For Sale
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