Due diligence is a necessary, yet time-consuming process that any seller has to go through when looking for a buyer for their business. It isn’t always done correctly, causing unnecessary delays and improper document disclosure that can affect the security of all parties involved in the deal. Below are a few things, as a seller, that you should prepare for during the due diligence phase of your deal.
Begin As Early As Possible
There is no point leaving your due diligence preparation until the last minute. Beginning the process as early as possible will save you time that could have been spent on other aspects of running your business and any parties involved energy wasted on a transaction that could have been completed months ago. Begin by preparing all the necessary records and documents, such as tax returns, balance sheets, employee information, corporate documents and any other information that would be relevant and of interest to a potential buyer.
Set Up A Secure Virtual Data Room
One of the (if not the most important) aspects of successful due diligence and the subsequent sale of your business is efficient and secure data disclosure between yourself and the parties involved in the deal. This is where a secure virtual data room provider becomes an ally in the quick closing of your deal. Virtual data room software allows you to share all relevant information about your business, honestly and accountably, while still maintaining organization and security so that anyone entering the data room knows that the data shared is under lock and key at all times.
As as an administrator you are given the ability control the permission settings of those viewing certain documents and can revoke access whenever you might think the security of confidential information is being threatened. Investing in this tool for speedy due diligence should not be overlooked as a necessity during M&A transactions.
Establish The Right Team
In order to facilitate a successful deal, you need to know that everyone on your team has your best interests in mind. This is why finding the right brokers and advisers for you and your business is a vital step that should be considered very early on into the selling process. You want to be guided on the right path by an expert if things aren’t going as expected and you want to ensure that your needs are being fought for in decisive negotiations so that you are getting what you are worth for the business you have built. Having the right team behind you will make a world of difference when it comes to closing a deal quickly and with the appropriate compensation.
Know What Information You Need To Provide
Another reason as to why having the right team at your side is important is their guidance in what information should be shared with a prospective buyer during the due diligence phase. While being honest and forthcoming as possible during disclosure is vital, there is also some information that is more important to buyers than other information. Before you begin uploading documents into your secure virtual data room, be sure to understand what will help make the process as efficient as possible while still maintaining accountability with your buyer.
Don’t Slow Down Business Processes
During the arduous due diligence phase of selling your company, it can be tempting to slow down the way you run your business on a daily basis. Making sure that operations are running as smoothly as possible at all times during a merger or an acquisition is vital in illustrating to a buyer that your numbers are still doing well and you aren’t affecting the value of your business while its fate is still being decided upon. Just like how your business’s history will be scrutinized within your data room, so too will its current performance and will be a determining factor as to whether a buyer or investor is still interested a few months down the line.