For both buyer and seller, it is important to perform due diligence on the other party to determine if their representations are accurate and complete.
The buyer wants to make sure that:
- The seller has the financial ability to conduct the transaction.
- The seller has no issues that might impact the ability of them to complete the transaction.
- If a strategic sale, to make sure there is a good fit between the two companies.
- If an earn-out is involved, to make sure that the newly combined companies will likely be able to achieve the earn-out objectives.
The seller wants to make sure that:
- The financials provided by the seller are accurate.
- That there are no undisclosed liabilities.
- That all of the disclosed assets are solely owned by the seller.