Due diligence is the process of evaluating a business situation from all aspects before making a decision. Due diligence is often performed when buying a business, but there are many other situations in which due diligence might be performed.
Due diligence is not a general investigation but it includes specific elements which may vary based on the situation.
Due diligence is performed to protect both parties, but primarily the purchaser, in uncovering potential liabilities and financial matters, to make sure nothing is hidden.
The Process we follows:
- Examine all records and documents.
- Spend time at the business location, talking to managers, executives, employees.
- Check sales against customer lists to verify that the business has the customers it says it does
- Look at potential future plans for expansion, condition of facilities, equipment, furniture and fixtures to verify that they are as reported
- Look at all documents which might incur liability for the company, including sales agreements, purchase agreements, liens on assets
- With the assistance of your attorney, examine documents relating to any ongoing or potential lawsuits, and recent litigation that has concluded.