The time and energy necessary to prepare a business for a potential transaction can be exhaustive. It’s no wonder when a business owner finally executes a letter of intent (“LOI”), he may feel like the hardest work is in the rearview mirror. Trust us, ‘phew, we are good now’ is a bit premature!
While preparing a business to go to market and actually going to market are definitely arduous steps in the sales process, the “real work” begins after the buyer has been identified and diligence commences. It is then, that business owners will be tasked with simultaneously navigating the tsunami of diligence requests, all the while, continuing to successfully operate the business.
Oftentimes, we see deals delayed or worse, terminated when business owners ‘check out’ thinking the sale is in the bag.
A few tips to help business owners stay focused include, 1) confidentially, assemble a deal team to include one more key team members to help respond to diligence requests, 2) continue to operate the business and monitor reporting data as if a transaction was not on the table, and 3) prior to selling your Company, map out a drive/folder to store customary documents required during diligence (i.e. corporate documents, historical profit and loss statements and balance sheets, tax returns, and any other key metrics available).
Finally, in the event the business is hit with a curveball and suffers operational decline during diligence, it is much easier to overcome when the seller is well-versed of the situation and is prepared to take immediate steps towards reversing any downward trends.
Check out more articles on this topic here:
Six Most Common Reasons M&A Deals Fall Apart | Eaton Square
The Seven Worst M&A Mistakes and How to Avoid Them (lhh.com)