Portland Business Broker Thoughts

A common question that business brokers get is what is Due Diligence, and what are buyer’s looking for in the Due Diligence process.  This is an excellent question and what it entails and how difficult the process will be often largely depends on how good of a job a business broker has done with packaging the business.  Due Diligence is simply the process of a buyer investigating the details of a business.  This may include both discovery of previously undisclosed information about a business and the verification of information already presented.  During Due Diligence a Buyer will typically look at all aspects of a business including the market for the company’s products and services, the  characteristics of the products and services, how the business is marketed, the sales process, operations, purchasing, information on customers, personnel, and financial performance and reporting.  At Codiligent we answer most of the high level questions that a buyer will consider material to making a purchasing decision in the confidential information package so that the formal due diligence process becomes a verification process, rather than a discovery process.   Many business brokers don’t do this, and the result is that there is too much discovery of new information in the due diligence process causing buyers to either terminate the transaction or re-negotiate price and terms as a result of learning new, previously undisclosed information.

Following is a webinar put on by USC’s Marshall School of Business on September 18, 2009 that discusses Due Diligence.  While this information is geared toward buyers of larger businesses, it will give you a better idea of what buyers tend to look at when conducting Due Diligence.