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Conducting Due Diligence on an Acquisition

Conducting Due Diligence on an Acquisition

After you have an offer accepted (best practices are through an Letter of Intent LOI), you will enter a due diligence period.

The purpose of due diligence is to really check the numbers are matching what you anticipated, there is synergy, and the business can continue forward with proper systems that are there.

The goal of due diligence is to eliminate surprises. You want to understand those surprises beforehand.

Best practices are for a 7 day to 90 day due diligence window, depending on how soon you want the deal to close and if there is bank financing and other third parties involved.

General guidelines are as follows.

7 Day Due Diligence – All cash deal, small business, extremely great value, Quick Close, Fear Someone Else Might Buy This
14 Day Due Diligence – Typical window for cash deals or cash + earnout deals, Most of the heavy lifting has been done, now it’s just checking some housekeeping items and making sure it is legitimate
30 Day Close – Typical due diligence periods
45 Day Close – Standard if there is financing involved, and it is a more complex deal
60 Day Close – If bank financing is involved
90 Day Close – On large M&A Deals where institutional financing is involved and/or licensing/permits are involved to transfer ownership

If your offer is accepted, you want to have a checklist that you will send to the seller to provide you with documents and other materials so you can do your due diligence.

You will also want to have several meetings to shore up any questions.

Generally, as a rule of thumb, the more you are going to ask for during due diligence, the more of a non-refundable deposit there should be. Depending on the deal, you are requesting ample time from the seller and their representation during due diligence, whilst possibly holding this off the market from someone else.

Time being spent away from their business to focus on why you should buy it, sometimes makes the business suffer slightly, so you want to respect that process. Again, it really depends on the deal and smaller deals, don’t necessarily need a deposit, which we will discuss another time.

If there is any staff in your company that will transfer over, you will want to introduce them and get them acquainted to see if there is a match and a fit.

Remember, depending on the deal the amount of requests you have will depend on the deal and often times price. If you are getting something as a fire-sale on an “AS IS” basis, due diligence will probably be limited, whereas if you are paying what the seller wants and it is dependent on everything matching up, you will have more rope to explore and do things such as come in to the operation and possibly shadow before close.

Due diligence is not training and transition, which you can bake in and negotiate in to the deal, but you will want to have a general understanding of how the business works. Obviously, you should not really be acquiring businesses you have limited to no experience in. Hopefully you have knowledge of how to grow this business and run it, but you need to understand how their systems work. You want to be able to provide value.

We will help you get the best deal on an acquisition and protect you at the same time, while ensuring we get the deal done.
If you would like to hop on a call with us to go over things related to acquisitions and general business overview, please schedule a time here. We do a one hour deep dive where we go over your needs as it relates to acquisitions & business expansion, and then we go on the hunt for you to line up a business that fits.




Contact us for your next acquisition:
JARBLY LLC
Email: acquisitions@jarbly.com
Phone: (800) 773-1523

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© 2024 JARBLY LLC is a national brand operating through itself as a Limited Liability Company in the State of FL and works with a number of professionals located throughout the country to provide client related professional services. JARBLY LLC does not guarantee the accuracy of any of the information disclosed in this website or any materials sent including listing information including but not limited to details surrounding a business or listing or property. It is important if you transact with JARBLY LLC in any capacity, you consult a legal professional. The officers, agents, directors, or principals of JARBLY LLC are not licensed attorneys. While the principal of JARBLY LLC is a licensed real estate associate, he is not an attorney. JARBLY LLC is not a registered broker-dealer under U.S. securities laws. For more details on the nature of working together please review our disclaimer at http://jarbly.com/disclaimer and make sure to consult professional legal counsel regarding transactions to be in compliance in accordance with relevant local regulatory and legal requirements.

This website from JARBLY LLC does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or any other product or service by JARBLY LLC or any other third party regardless of whether such security, product or service is referenced in this website. Furthermore, nothing in this website is intended to provide tax, legal, or investment advice and nothing in this website should be construed as a recommendation to buy, sell, or hold any instrument or asset or to engage in any investment strategy or transaction.

This website is operated by JARBLY LLC with registered office in Boca Raton FL 33496, United States of America.

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Are you a realtor? Ever wanted to join a boutique brokerage with frequent 1 on 1 mentorship, connections, and a very personal experience.

Joshua Blank the founder of Trend came from big box corporate brokerages to form his own boutique brokerage called Trend Realty. Shortly after he created the brokerage, I joined immediately. I saw the writing on the wall. A better way to advertise and market as a brokerage for realtors as opposed to the burden all on the realtors themselves.
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