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Pre-sale Due Diligence

For a fee, Performance Business Advisory can perform a comprehensive, professional Pre-Sale Due Diligence on your business. This will simulate the type of due diligence that a serious, qualified buyer prospect for your business will perform, prior to removing all of the Conditions Of Purchase. This will assist you in being sure that your business will pass the buyer’s due diligence quickly and that there will be no roadblocks in the path towards getting your business sold. This can also minimize the amount of disruption to your ongoing operations, staff, vendors and customers. It will also assist you in determining any changes that may need to be made to your day-to-day business operations, accounting practices, client relations, inventory and assets that may increase the ultimate sale price for your business.

In order to perform a comprehensive Pre-Sale Due Diligence, we will require more comprehensive information than for a Courtesy Valuation. With your co-operation, we will be working with you, your key staff, your accountant, your lawyer and possibly some of your other business advisors to compile the necessary information. Keep in mind, this is the very information that every qualified prospective buyer, and his advisors will want to see and verify when they do their due diligence, prior to purchasing your business.

Having all of the following information together in an organized and comprehensive manner will facilitate a quick and smooth Pre-Sale Due Diligence and ultimate sale of your business:

  • Detailed information on the Seller’s products and services, how they market them and to whom, Information on Seller’s industry, the company history, competitors, growth opportunities, etc.
  • 3 most recent years of complete financial statements. If the business is being purchased as an Asset Purchase, only Profit and Loss Statements will need to be reviewed. If being purchased as a Shares Purchase, Balance Sheets will also be reviewed.
  • Current Interim Financials.
  • 3 most recent years of past complete tax returns.
  • Current Inventory value at landed cost, along with a review of average Inventory levels throughout a typical year. Current value of real property, if included in the purchase. A current appraisal would be highly recommended. If the business premises are leased, we will review the full copy of the Premises Lease. A list of all Assets. The Furniture, Fixtures, Equipment and vehicles that are included in the Purchase Price, along with an estimate of the “used replacement value” of each item.
  • Any Asset Purchase Agreements and any Equipment Leases to determine that they are current and transferrable to a qualified Buyer.
  • A list of all items within the business premises that are NOT included in the Purchase Price Copies of any trademarks, patents, licenses and/or intellectual property that is included in the Purchase Price.
  • A review of the software necessary to operate the business, along with its current value and the cost, if any, to upgrade it to most current version.
  • A review of the business Web Site, along with hosting and maintenance agreements.
  • Current Accounts Receivable Report including ageing.
  • Current Accounts Payable Report including ageing.
  • Checkbook Register(s) and bank statements for last 3 years
  • Current Client List. We will be looking for client longevity, client growth, client diversity and sales concentrations.
  • List of current suppliers. We will review agreements and relationships.
  • List of Employees. We will review the terms of their employment, their position, length of employment, any long term Employment Agreements, and current compensation package, including benefits.
  • Employee Interviews. It is important for a smooth transition that key employees are made aware of the anticipated purchase of the business. Many times, it is essential to the continued success of a business, that key employees will be retained by the Buyer. These interviews will be conducted in such a manner that will not cause unnecessary concern by staff members.
  • Copies of all contracts relating to advertising.
  • Copies of current promotional materials.
  • Copies of all licenses necessary for the operation of the business.
  • Copies of any Franchise Agreements, License Agreements, Dealership Agreements and/or Distributorship Agreements (as applicable).
  • Copies of all insurance policies for review and determination of transferability. A copy of the Policies and Procedures Manual(s).
  • A meeting with the Seller’s Lawyer to determine if there is any litigation pending, liens outstanding, that the Corporation filings are current (including the Minutes Book), and to determine that all government required filings are current. The Lawyer should also demonstrate that any trademarks, patents, licenses or intellectual property are properly registered and protected.
  • A meeting with the Seller’s bookkeeper and accountant to review current accounting practices and make sure that all financial records are up to date and ready for presentation and review by the Buyer’s accountant.

All of the above information, along with anything else that we discover during the Pre-Sale Due Diligence process, will be kept strictly confidential. If you list your business with Performance Business Advisory, this information will be only divulged to qualified buyers that have signed a Confidentiality and Non-Disclosure Agreement and have completed a Confidential Purchaser Profile that has been reviewed and approved by the business owner.

At the conclusion of the Pre-Sale Due Diligence, we will be able to determine the ultimate Purchase Price and terms for your business that will meet your objectives. We will also be able to advise you on what aspects of your business operations and/or business documentation need to be fine tuned in order to maximize your profitability of your business while waiting for the business to sell. We will also be able to assist you and your team in making sure that all aspects of your business are ready for a full due diligence by a qualified buyer. This will make a very positive impression on the buyer and make for a smooth, swift and trouble free process.