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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