In golf, a divot is a piece of turf that is cut out of the ground in the process of swinging a golf club. A hole, sometimes large, is left where the turf was scraped off by the golf club. A normal size divot is part of a good golf swing. A divot that is too large is part of a bad golf swing. While conducting due diligence, purchasers of businesses take swings at the target’s business, creating divots. A due diligence investigation that reveals unusually large divots or “holes” in the target’s business can in turn result in the purchaser exercising a pivot, that is, changing the terms of the business deal to the detriment of the seller. How can the seller avoid these divots and resulting pivots? By being prepared for the purchaser’s swings. All categories of due diligence need to be preemptively examined, fortified and rebuilt as necessary. Obvious areas of the seller’s business that should be in tip-top condition are the protection of intellectual property, strong employment and workplace policies and robust and up-to-date privacy policies. By having its ship in order prior to the purchaser’s swings, the seller can avoid the abnormally large divots and resulting deal pivots.
If you have any questions about this or any other M&A issue,
please contact Glenn Solomon at firstname.lastname@example.org or 443-738-1522.
ABOUT GLENN D. SOLOMON
email@example.com | 443-738-1522
Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.
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