Seller Due Diligence

Often a step missed in planning for the sale of a business is for the seller to conduct an accounting and legal due diligence process on their own assets and legal documents. 

The review should include all the following:

  1. Reveiw of financial reports to confirm that they accurately describe the revenues and profitability of the business.
  2. Review of leases, loan documents or any other asset to confirm that everything is in order.
  3. Review all intangible assets to determine if copyrights or patents should be filed.
  4. Review customer and supplier contracts to see if they are still current and up to date.
  5. Review any other legal or accounting documents that may be a source of representations of the seller to the buyer.

The purpose of this review is to make sure that there are no surprises in statements, representations, or warrants made to a potential buyer.  All little mistake in misrepresenting the selling company could easily chase off a qualified buyer.