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Creating a Due Diligence Checklist
The due diligence checklist is an important obstacle buyers have to cross when purchasing your small-sized business. Some sellers call it the business equivalent to colonoscopy, however this process can be turned into smooth sailing with some forward planning.
Creating a thorough and comprehensive due diligence checklist is among the most important first steps in preparing for a sale. This is best done well before potential buyers start seeking information, so that documents are available at the time a buyer comes in.
There are certain documents that all companies must collect and submit for due diligence, even though each business will have its own distinct requirements.
These include accounting and financial documents, legal documents, sales and marketing data including intellectual property and patents, human resource, and management. Being organized and prepared can greatly speed up the due diligence process, and also reduce the time needed to put a deal together.
Other important considerations to include in the due diligence checklist are:
To avoid over-allocating resources, it is essential to establish the amount of due diligence prior to the start. It is also essential to identify the most critical risks prior to the time. This allows for a prioritized risk assessment framework and a targeted mitigation plan. In addition using a due diligence checklist that includes the function of a date stamp makes it easy to see at a glance if the information has been updated recently. This will avoid delays caused by sending out outdated information.
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