Why Do You Need Business Due Diligence When Buying or Selling The Business

Undertaking business due diligence is a vital step when it comes to buying or selling a business, simply put business due diligence means fact-checking a potential opportunity to ensure that everything is as described or advertised.

Business mergers and acquisitions happen all the time and it would be unprofessional not to mention risky for anyone not to undertake proper due diligence. Below we list some of the reasons why you need business due diligence when buying or selling a business?

Finances

Checking the finances is one of the most important parts of business due diligence as you need to have a clear understanding of the company profile.

What do their financial goals look like as well as their assets and outgoings – how do they compare similar businesses operating in the same marketplace?

Marketplace

While we’re talking about the marketplace this is another key area to look at. What are the company’s expectations for the future and who are they up against? It is also a good idea to look at past and present sales figures as well as what they forecast for the future?

Clients & customers

Another area of the business to pay close attention to will be the customers which if you will inherit or pass on. As such you might need to revisit the agreements that you have in place with these customers, are they fair or do they need to be adjusted to meet your own business goals.

Business operations

You should have a clear overview of the operations side of the business, this will include any significant processes that affect the day to day running of the business.

You will have to look at how the management team and staff are structured as well as assess and view all suppliers and on-site equipment. Is everything in good working order or does certain machinery or equipment need updating?

Do your homework

For the average UK consumer, you have a certain level of consumer rights, this means that if you purchase a product or service that doesn’t deliver or promote what it should you have the right to a replacement, repair, or refund.

Buying or selling a business is a little different in that if you don’t do your due diligence thoroughly it can be much harder to undo a contract or agreement later down the line.

Contact Us

For more information about business due diligence, you can speak to one of the team here or call us direct on 020 3778 0973 or email info@thestanlee.com

Our team of experienced professionals will be able to assist you in all areas of business due diligence and advise you on what to look out for.