Are You Planning to Sell a Business? Avoid These Traps
It has been said that some business owners have been known to refer to due diligence as “the entrepreneur’s proctology exam.” While this is a crude analogy, it is a good representation of what it feels like when a stranger pokes, prods, and looks inside every inch of your business. Most professional acquirers will have a checklist of questions they need to be answered if they’re considering buying your company. They’ll want answers to questions like: Do you have consistent, signed, up-to-date contracts with your customers and employees? Are your ideas, products and processes protected by patent or trademark? What are the loan covenants on your credit agreements? How are your receivables? Do you have any late payers or deadbeat customers? Do you have any litigation pending? In addition to these objective questions, they’ll also try to get a subjective sense of your business. In particular, they will try to determine just how integral you are personally to the success of your business.
