Due diligence is a comprehensive appraisal, which is conducted by the buyer to establish the commercial potential of a business before final purchase.
Due diligence is a vital part of the purchase process. It is generally performed after the buyer and seller have agreed in principal to the sale but before a binding contract has been signed and/or during the conditional period of the contract.
Performing a comprehensive appraisal of the potential business enables the buyer to verify the assets and liabilities of the business, the previous years history of what revenue has been generated, what expenses have been incurred, the overall profit of the business each year and whether the business is growing.
The appraisal will also highlight any legal or financial issues that may need further investigation or where more information is required from the seller. Due diligence will also provide the true value of the business and whether the business will make or cost the buyer money in the future. These are just a few of the areas looked at during the appraisal.
Our team at Initiative are experts at due diligence and can assist you in performing a comprehensive appraisal that will assist you to make a well-informed decision when purchasing your new business venture.
Author
Andrea Jacks
