Due Diligence

A Second Set of Eyes Before You Sign

The biggest mistakes in business are rarely made in day-to-day work. They are made in a handful of large commitments: buying a company, signing a ten-year lease, taking on a partner, or making a major equipment purchase. Once the papers are signed, most of these are very hard to undo. Due diligence is the work you do before you sign, to make sure the deal is what it appears to be.

What We Look Into

Buying a business or buying in. We review the books, the customer list, the contracts, and the people. Is revenue spread across many customers or tied to two or three? Are the profits real, or do they depend on the current owner working seventy hours a week? Are there contracts that end when the owner leaves? We look for what the sale documents do not say.

Commercial real estate and leases. We review the business side of a lease: total cost over the full term, escalation clauses, who pays for repairs, renewal options, and whether the space fits your plans for the next five to ten years. Your attorney reviews the legal language; we make sure the deal makes business sense.

Major equipment and vehicle purchases. Whether buying is better than leasing, what the true cost of ownership will be, and whether the purchase will actually pay for itself through the work it enables.

Partners, vendors, and franchises. Background checks on the people and companies you are about to rely on, including their history, references, reputation, and track record.

Red Flags We Often Find

• Revenue that depends on one or two customers who could leave at any time.
• Profit figures that include one-time events or leave out the owner’s real salary.
• Equipment that needs replacing soon, not reflected in the price.
• Lease terms with costs that rise faster than expected.
• Key employees with no reason to stay after a sale.
• Franchise systems whose current owners are not making the returns promised.

How It Works

We start by understanding what you are trying to achieve and what you are about to commit to. Then we request documents, review them, and talk to the people involved where appropriate. Due diligence often runs on a deadline, so we agree on a schedule up front and deliver findings in time for your decision.

We do not replace your attorney or CPA. Legal review of contracts and tax structuring stay with them. We coordinate with them so the business findings, the legal review, and the tax questions come together in one picture.

What You Walk Away With

A written report in plain English: what we reviewed, what looks solid, what concerns us, and a list of questions to ask the seller, landlord, partner, or vendor before you sign. Sometimes the answer is that the deal is good and you should move ahead with confidence. Sometimes it is that the price or terms should change. And sometimes it is that you should walk away. Each of those answers is worth far more than it costs to find out.