A due diligence checklist is a crucial element of the M&A process. It assists buyers in avoiding time-consuming and costly surprises by revealing the liabilities of a company as well as problematic contracts intellectual property concerns, and litigation risks. It helps them determine whether a deal is appropriate for them from a cultural standpoint.
In the process of creating a Due Diligence Questionsnaire (DDQ) is a daunting task, especially for small-scale entrepreneurs who have never created one before. It’s essential to be thorough, but not overwhelming that the company is not able to answer it.
The list of documents needed may be lengthy, but there are some basic guidelines that must be met. These include three to five years of tax returns, insurance policies, financial reports as well as employment contracts. an original copy of the bylaws or operating agreement.
These can make the DDQ more efficient, both for the buyer and seller. It can also help decrease the chance that sensitive information is shared without proper security measures in place.
The due diligence process may be a stressful process, but with right plan it can be made as easy as it can be. Your M&A advisor can assist you in identifying the documents that buyers are likely to ask for. Prepare these documents ahead of time to ensure that the process of selling your business can move quickly. For more information on how to prepare your company for a successful sale, contact the Allan Taylor & Co team today!