How To Conduct A Due Diligence Before An Acquisition Offer?
You have been offered to take over a company at a price you cannot reject or you have identified a target company to acquire.
You have already talked to the Selling owner, and you have signed a Letter of Intent.
Remember, it’s your responsibility to do your own Due Diligence before you agree to pay for the Price.
Please form a Due Diligence team for this purpose.
From my past experience, among many things you need to check and do during your Due Diligence will be these 5 core ones :
1. Past Financial Statements ( Revenue, Costs, Profits, Assets, Liabilities, Cash, etc )
2. All Legal Documents ( Title, Intellectual Property, Scope, etc )
3. Identify Proforma Adjustments to the past Financial Statements in order to reduce final Valuation Price later
4. Look out for Contingent Liabilities off Balance Sheet to boost your negotiations later
5. Forecast for any further Capital Expenditure to be incurred to set aside enough Cash
Good Luck !
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