The phrase “due diligence” comes up in a wide variety of contexts in our culture and can mean anything from the reasonable type of preparation research a person does before making any kind of decision (“I did my due diligence on Yelp before making Valentine’s Day reservations”) to the specific “due diligence defense” an underwriter can present when sued for securities violations following an IPO gone bad. In the context of the sale of an emerging growth company, the due diligence process involves the potential buyer going through the records of the target company to see whether it is actually worth what the buyer hopes it is worth and to determining whether there are potential risks that would warrant not going forward with the deal.
Acquisition Archives
Selling Your Business – Practical Tips for Sellers – Part 8: Pre-Closing Covenants and Conditions
This is part eight of our series discussing the sale of a business from the seller’s perspective. We’ve covered deal structure issues, seller financing, earn-outs, letters of intent, due diligence, and the first two sections of the purchase agreement dealing with (i) major business points and (ii) representations, warranties, and disclosure schedules. In this post, we’ll discuss the portion of the purchase agreement dealing with the period after the signing date and up until the closing. [Read more…]
Selling Your Business – Practical Tips for Sellers – Part 7: Representations, Warranties, and Disclosure Schedules
This is part seven of our series discussing the sale of a business from the seller’s perspective. We’ve covered deal structure issues, seller financing, earn-outs, letters of intent, due diligence, and the first section of the purchase agreement dealing with major business points. In this post, we’ll discuss the seller’s representations and warranties and the related disclosure schedules to the purchase agreement. Lawyers frequently debate the subtle and esoteric differences between “representations” and “warranties”, but for our purposes, in this post, they are basically statements that the parties make about themselves and their businesses, and we’ll refer to them simply as “representations”. [Read more…]
Selling Your Business – Practical Tips for Sellers – Part 6: The Purchase Agreement
This is part six of our series discussing the sale of a business from the seller’s perspective. We’ve covered deal structure issues, seller financing, earn-outs, letters of intent, and due diligence. In this post, we’ll begin discussing the primary definitive deal document, the purchase agreement. [Read more…]
Selling Your Business – Practical Tips for Sellers – Part 5: Due Diligence
This post was jointly written by Jennifer Wilson and Casey W. Riggs.
This is the fifth in a series of posts discussing the sale of a business from the seller’s perspective. In the first four posts, we provided an introduction to this series and discussed asset versus stock sales, seller financing, earn-outs, and letters of intent. In this fifth post, we’ll discuss the beginning of the deal process (after signing of the LOI), which typically begins with a comprehensive review of the seller’s business by the buyer (generally referred to by those in the M&A industry as simply “due diligence”).[1] [Read more…]