Business owners, upon entering into a formal purchase agreement with a buyer to sell his/her business, will immediately be introduced to a process known as due diligence.  Due diligence is the activity that a buyer performs consisting primarily of an investigation of the seller’s records to ensure a complete understanding of the transaction before it is consummated.  It can create a high level of anxiety amongst sellers due to the vast amount of information buyers generally seek.  Sellers are often presented with a checklist consisting of several pages that will encompass an extensive array of requested documents/information (e.g., financial statements, customer/product/competition detail, sales and marketing data, employee/payroll information, etc.) and its chief objective is to provide the buyer with the information necessary to fully assess the risk of the acquisition before concluding the transaction.

Huntington Business Group has long recognized that sellers have little appetite for such overwhelming projects.  We therefore, in the early stages of the engagement and well ahead of any of any interaction with a buyer, educate those sellers who have not experienced the due diligence process.  Huntington Business Group, in fact, works with the buyer and his/her advisors in order to mitigate the time consuming impact that due diligence can have upon sellers.  Furthermore, we assist the seller in collecting and organizing the information requested by the buyer.  If certain requests are deemed to be unreasonable then we communicate with the buyer and/or the advisors to explain and justify our position.  Many of the checklists that a buyer will present to the seller are downloaded and, as such, are not tailored for the size or type of the business that our client is selling.  We have, in fact, seen due diligence requests for small businesses that are more comprehensive than those that are submitted in connection with $25 million plus transactions.

Mindful of  the potential frustration that can be associated with due diligence and the consumption of time required to fulfill due diligence requests we, as noted above, advise our clients how to be prepare for the process.  The VentureXchange™ system, designed and created by Huntington Business Group and available exclusively to our clients, outlines every detail of selling a business to include navigating through this often lengthy due diligence process.  Specific tools are available to guide our clients through a preliminary procedure wherein our clients are able to put their company through a review process that anticipates what a buyer will be evaluating during due diligence.  A review of operational, marketing, personnel, technology, legal, regulatory, environmental, insurance, contractual, credit and financial/accounting issues before a buyer enlists his professional advisors to do the same is the focus of this exercise and is an immensely valuable undertaking.  It will not only ease the future burden, but will also demonstrate to the buyer that he/she will be taking over a business that is well organized and efficiently operated.