Why You Shouldn’t Skip the Due Diligence Process
If you’re looking to acquire a Florida business, it is important to do proper due diligence before the acquisition becomes official. This allows you to verify any sales, revenue or other information provided to you by the seller. Depending on the complexity of the transaction, it may take several months to complete this process.
Who Should Be Part of Your Due Diligence Team?
A due diligence team typically consists of an attorney and a financial professional. It may also include consultants who understand how to evaluate business transactions in a given industry. For instance, if you were acquiring a retail company, you might want to consult with someone who has experience running retail companies.
If you are acquiring another company with the help of outside investors, they may also want to learn more about what they’re investing in. These individuals may also have attorneys, accountants or others who will likely want access to any information that you receive.
What Do You Need to Know About a Potential Acquisition Target?
At a minimum, you’ll want to see financial statements for the past three years. This can help you determine if the company is profitable or has the potential to be profitable in the near future. It may also be a good idea to find out if the company has any other large shareholders and what their role might be if the acquisition is finalized. Finally, it’s important to know if the business that you want to own has past due debts, is the subject of any lawsuits or has any other problems that might hurt your brand if a deal goes through.
There is a chance that acquiring an existing business might help to accelerate the growth of your own firm. However, it may be in your best interest to have an attorney review a proposed deal before it goes into effect. This may minimize the odds that you take ownership of an organization that isn’t profitable or has other issues that weren’t disclosed by its former owners.