Financial due diligence provides peace of mind to you by analysing and validating all the financial, commercial, operating and strategic assumptions that you have made in buying the business. In my opinion, it will give you significant and necessary confirmation. Just getting into the business, looking around, checking emails, reviewing information like the complaints log, and chatting to the team about what’s going on will give you a really good feel for the business. Also, looking at the numbers, the VAT returns, and any mistakes made will indicate how well the business is run. If you are not buying the business, it may seem like you are looking a gift horse in the mouth, but it may not be such a gift. I’m not a fan of using Latin, but the phrase caveat emptor is completely relevant here, which means Buyer, beware. It is up to you to check what you are buying. The themes to look at our as follows: Administration Financial Human resources Assets Taxes Intellectual property Legal matters Customers 4. Not Knowing The Value / Agreeing The Price – Paying For Potential, Understanding Goodwill The fourth big mistake, people make is not knowing or agreeing the value of what they are buying, and paying for potential and not understanding what goodwill is. This may seem to seem obvious, but how do we know if the business we are being offered is being offered to us at the right price? The
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