Archive for January, 2013

Due Diligence – Putting your own house in order.

There is plenty of information that you should have to hand to demonstrate that you are running a serious and well managed business.

Not many companies will have all of it, but it’s better to be one step ahead than behind.

So check out this list. Can you get your hands on it quickly?

  • General details about your organisation– Articles, Memorandum of Association, List of Shareholders, Copies of Agreements. Organizational chart. Business and Marketing plans.
  • Financial Details – Accounts for the last 3 years, Company Credit Reports, Budget and Projections, Debtors and Creditors
  • Details of Physical Assets – Equipment / Leased
  • Info about your Properties – Leases and Mortgages
  • Intellectual Property – Patents / Trademarks / Copyrights / Licenses and Continuing Agreements
  • Staff – list with time spent and salary / resume of key employees / personal handbook / any employee problems
  • Licenses and Permits
  • Environmental Issues
  • HMRC paperwork
  • Material Contracts – Joint Ventures/ Bank Arrangements / Distribution Agreements / Letter of Intent / Company Standard Purchase Order and Invoices
  • Products and Services – List and Complaints / Warranty
  • Customer lists – 12 largest customers / Major Customers lost in the last 2 years
  • Competitors
  • Litigation details
  • Insurance- Business / Property / Key Man/ Directors and Officers / Company Claims History
  • Articles and Publicity

Purchasing a Company

When in the position of purchasing a company, ask yourself these questions and go in search of the answers.

  • If you are buying a company how can you be sure you are buying the business you think you are? Find out all the details you want/need to know. Use the list above as a guide.
  • Are you sure it’s as good as the seller says? Sort out the fact from the sales talk.
  • How can you be certain unexpected costs and obligations will not suddenly appear once you are the owner?

Finally, to be absolutely thorough, proper due diligence may have to involve hiring a firm of private investigators, they look for:

  • Checking out key people
  • False accounting
  • Undeclared outgoings and liabilities
  • Computer intelligence
  • Potential internal threats
  • Potential external threats

As with everything there is a trade off  betwean getting all the information and a commercial deal, which allows the seller not to disclose everything in the run up to signing the contract.

This article was taken from a discussion of the Business Exposure Group.

If you are a Director or business owner and would like to attend one of their informative round-table discussions, please contact philipdrazen@bxgroup.co.uk

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How valuable is business knowledge and support in this climate?

As Business owners and directors, we all have a variety of challenges facing us on a daily or weekly basis.

Some of these issues fit comfortably into our own sphere of expertise and we know instantly how to deal with them.

In many cases however, we come across issues that may need another level of expertise and maybe our own experiences don’t provide the solutions that we seek.

It is at times like this when we would ideally turn to an instant network of advisers that we had to hand, to whom we could turn – and more importantly, trust, to discuss our business issues with, without fear of the discussion being repeated elsewhere.

One place to find a perfectly acceptable solution to this dilemma is The Business Exposure Group who hold regular invitation only round-table business discussions across the North of England.

The groups are made up by approximately a dozen business owners and directors from a range of different sectors who discuss selected issues around the table.

These discussions are chaired and strictly controlled by a very experienced and knowledgable lawyer and businessman who gets maximum value from the event for all participants.

It is, in effect, like having a group of experienced non-executive directors around your boardroom table who each have their own individual talents and experiences which they bring to the discussion.

The benefit of sitting at the table for any business, can be considerable and one guest commented that, from a business point of view, “It was the best three hours that he had spent in the last five years”.

Praise indeed for the Business Exposure Group and I can also add my opinion which is equally flattering:” The high calibre of the participants and the incredible value of the discussion are equally matched by the potential business that you gain access to through the participants at the table”.

If you would like more information about how you may be able to attend one of these discussion groups in either Manchester, Sheffield, Wetherby or Leeds, please email Philip Drazen via email at philipdrazen@bxgroup.co.uk

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Due Diligence – Consider which Customers to do business with.

Modern business is dangerous. It constantly demands us to trust people we have never met before over services, time, and money. A good handshake just isn’t enough to guarantee legal security. People are not rigorous enough, which is why the need is greater than ever for due diligence.

One tool out there that can help is the website www.duedil.com which allows you to follow suppliers, competitors, and clients. The website provides free company information, including director’s backgrounds and allows you to compare business with their rivals. Currently, users from 75 of the FTSE 100 companies are using this service to conduct due diligence on counterparties, daily.

However, when Duedil can’t help there are other ways to satisfy your risk assessment.

All of the considerations involve an investigation of either a business or person prior to signing a contract. But remember, you have to ask yourself how much of this may be overkill. Everyone’s boundaries will be different.

Working with a Customer

These are steps that can be taken in the name of due diligence when working with a customer.

  • Take steps to indentify your customer- checking they are who they say they are, is more than just for banks and solicitors. Make sure your contract is with the correct trading entity.
  • Only offer credit to companies 3 years old with a one-year sound payment history.
  • Trade referees- get individuals from both sides to vouch for each others reliability and worth.
  • Asking for overall sales volume, so that you can see what risk the value of the order represents.
  •  Check their credit score.
  • Use Google to track their story.

This article was taken from a discussion of the Business Exposure Group.

If you are a Director or business owner and would like to attend one of their informative round-table discussions, please contact philipdrazen@bxgroup.co.uk

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