Legal Blog

M & A Nuggets: Seller- Do Your Due Diligence

due diligenceThe main due diligence that is conducted in a business acquisition is the purchaser’s investigation of the seller’s assets, financial condition and other items.  A seller, however, should also conduct due diligence with respect to its potential purchaser.  The primary areas to conduct due diligence on your purchaser are the purchaser’s financial wherewithal to fund the purchase price and the purchaser’s overall financial and operating condition.  You should seek some level of comfort from the purchaser that it will be able to pay the purchase price, whether by examining the purchaser’s financial statements or obtaining a copy of a loan commitment.  You should also search court records to determine whether the purchaser is involved in litigation to an unusual extent and to even confirm whether the purchaser is the subject of a bankruptcy filing.  Last, you should consult with relevant players in your industry and your network to ascertain that the purchaser has a good reputation and integrity.  By conducting this relatively easy due diligence on your purchaser, you can make sure that the sale of your business is destined to succeed from the outset.


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Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businessesstructuring ownership agreements, and advising companies in financial distress






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