Preparing for the due diligence process

‘Due diligence’ is a crucial part of selling your franchise – essentially, it’s the process of a buyer gathering a variety of information on the business they’re considering acquiring. They’re confirming that the financials, liabilities and so on are as advertised; that there are no skeletons in the closet, so to speak.

Planning ahead for this process as the seller is important, because it lets you see any possible liabilities which could, at best, affect your sale price; or at worst, be a complete deal-breaker.

Being prepared for the sale of your business is crucial – many transactions fail simply because the vendor was not able to supply the required information to the purchaser in a timely manner. It’s essential that you make the process easy for both sides and most importantly you realise maximum value from the sale – you need to get your business in the best possible shape and, just as importantly, you need to ensure you instil confidence in your prospective purchaser that the business they are buying is a good proposition.

Your buyer will want to complete their own due diligence which is essentially a comprehensive appraisal of the business to establish its assets and liabilities and evaluate its commercial potential.

For your part as the vendor you need to be ready and able to provide information about your business to your prospective purchaser in an efficient and professional manner.

Chantry Dropbox Service

We recommend that you start to compile relevant documents and information at the earliest opportunity. This will enable you to produce a comprehensive Due Diligence Pack containing all the details a buyer will need. This should include all relevant information; don’t be tempted to withhold anything which you feel could be a negative. This will simply serve to annoy your prospective buyer, and create mistrust, and , more than likely putting into question any information you have already provided. The key here is to deal with any negative issues that have been identified and mitigate, as far as possible, their effect on the value of the business.

Our Dropbox Service will help you to understand what information you need to prepare and enables you to collate and store all relevant documents in one safe place, ready to share with your prospective purchaser once they have signed an appropriate non-disclosure agreement which we provide as part of our resales service.

It all adds up to a seamless process – for you as the seller, but more importantly, for the buyer. The easier you make things for the buyer, the smoother their journey and the more likely it is to succeed. For both parties.

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