Despite the fact that many SME’s companies will have traded successfully until the point of sale, some will be unprepared for the level of scrutiny conducted by a buyer.
Once a deal is agreed, a buyer will instruct due-diligence on the target business. This is typically an exhaustive and detailed review that comprehensively audits the legal and commercial history of the company.
Issues discovered during due-diligence can result in a lowered offer, or even an aborted sale. Considerable monies will have been spent – which can be extremely costly for the seller if the result is a chipped-price or failed deal.
We provide a pre-sale review that covers the key aspects a buyer is likely to audit.
The review is based on simulating due-diligence by way of extracting data and documents followed by analysis and reporting.
Typical review points:
- Statutory Income Statement, Balance Sheet & Cashflow
- Management Information
- Forecast Income Statement
- Exceptional costs
- Customers, contracts & revenue
- Suppliers, contracts & expenditure
- Inventory, profile, ageing, turns, provisions
- HR, contracts & claims
- Accounting policies
- Debt covenants
- Contingent liabilities
- Legal review***
- Shareholder agreement(s) & share register
- IP: Trademarks, patents & copyright
*** Conducted in partnership with a legal specialist
The review is not meant to replace buyer due-diligence per se. However, the review is performed to a reasonable depth of analysis and aimed at identifying key issues prior to real due-diligence.
The benefit of the pre-sale review is that it allows for a company owner to correct key issues prior to going to market. This reduces, significantly, the risk of a deal failing once heads-of-terms are struck.