The letter of intent was submitted in part eight of our blog post series on how to sell a business and now comes the time for due diligence. The due diligence period is outlined in the letter of intent and is a time for the buyer to explore the business in question. The length of time for due diligence varies, but generally, a week or two for small businesses is all that is required.
During this period of validation for the buyer, the buyer may request documents to verify the claims made by the seller and advisor. These confirmation documents can include Profit and Loss statements, Balance Sheets, Tax Returns, and Bank or Credit Card statements. The buyer may also have an interest in reviewing contract documentation concerning customers and employees. The end of due diligence is really when the process can get interesting. This is the time when the buyer makes their big decision - they choose to move forward and buy the business, or they decline the LOI and move on.
If they decide they are ready to buy than the LOI will be translated into a purchase agreement (i.e. the closing contract) which will be signed by the buyer and the seller to officially put the business in the buyer's hands.
For more information on the due diligence process and how to sell your company, please schedule a complimentary consultation with one of our brokers today!
Rachael Holstein joined the Transworld Team in 2016 as Marketing Coordinator. Her working experience has been largely focused on Business Development and Marketing in the finance, architecture, property management, and information technology industries. A long time resident of Cleveland, Ohio, she attained her Undergrad from John Carroll University and a Master's Degree in Global Interactions from Cleveland State University. She relocated to Denver in 2013 for a change of scenery and a bit of adventure.