When buying a small business, especially in the competitive environment of the present time, part of the negotiating strategy is to get your foot in the door (offer) and using the due diligence period to vet the business. If the business appears to be priced right, time is of the essence to secure the right to acquire the business. Many buyers make the mistake of attempting to get all the due diligence prior to making an offer and submitting an LOI, and end up being elbowed our of the deal by more savvy buyers.
Once a buyer's agent locates an attractive business opportunity and receives all that the seller makes available via his agent a decision whether to buy should be make expeditiously and an offer/LOI submitted. The due diligence period (typically 30-45 days) is then the time to ensure that what is being acquired is clearly understood. Typically there is not penalty if a buyer cancels at any time during the due diligence period. Items under the review may include the lease, phase one report, equipment testing, building inspection and financial records, including federal tax filings, sales tax filings and other records they buyer deems helpful in confirming what the seller has represented the business performance to be.
Using the due diligence period to elbow your way to a first look at a business can be the difference between winning or losing out on a great opportunity. Check with your Russell Group Business Broker for buying or selling your business at no obligation for a free evaluation!
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