One of the most intensive stages of the M&A process is due diligence. This is when potential buyers take a deep dive into your business’s financial, legal, operational, and commercial records to verify the information presented and uncover any potential risks.
Being well-prepared for due diligence not only builds buyer confidence but also shortens the sales cycle and helps you maintain negotiating power. Here’s how to get ready.
- Organize Financial Documentation
Ensure that all financial statements, profit & loss, balance sheets, tax returns, and cash flow statements are accurate, up to date, and professionally prepared. Reconcile any discrepancies and have explanations ready for any unusual variances. - Legal and Compliance Readiness
Buyers will want to review contracts, employee agreements, intellectual property records, and any ongoing litigation. Make sure all documents are organized and clearly show compliance with relevant regulations. - Operational Transparency
From supply chain dependencies to customer concentration, buyers want to understand how your business runs. Be ready to explain processes, systems, and any known operational risks. - Address Red Flags Early
Issues like inconsistent revenues, unresolved legal disputes, or poor recordkeeping can delay or derail a sale. Identify and resolve these concerns before entering the market. - Work with an Experienced Advisor
Having a knowledgeable M&A advisor can make all the difference. We help clients prepare for due diligence by anticipating buyer concerns, organizing materials, and guiding communications throughout the process.
Aberdeen Advisors is a boutique mergers and acquisitions firm. Our dedicated team is committed to helping business owners successfully navigate the intricacies of an ownership transition. Additionally, our team is made up of former business owners and C-suite executives who have run and sold companies. We pride ourselves on a successful track record of shepherding business owners through the M&A process to ensure a successful outcome.