Continuing from our previous post last week, here are some additional areas of due diligence preparation that sellers should anticipate in their pre-sale planning.
CUSTOMER BASE PROFILE
The buyer will likely want to know about your customer or client base. To protect customer privacy, sellers should consider creating a list indicating the total number of accounts, and the number of accounts that account for more than five percent of total sales.
PERCENTAGE OF SALES FROM KEY INDUSTRIES
Buyers may also want to know what industries use the products or services offered by your business. Sellers should prepare a breakdown showing the percentage of sales for each industry.
SALES AND MARKETING
Sellers should summarize current marketing literature, sales training, advertising, lead generation, and other marketing activities:
COMPANY MILESTONES
Help your buyer with a chronology of significant company events starting with the creation of the company and continuing to the current day.
LEGAL
Legal and liability issues are one of the biggest risks that buyers need to assess when considering an acquisition. To help allay concerns, sellers should consider making a list of all licenses, certifications, and permits required by public or industry authorities and verifying that they are current. In addition, sellers should be prepared to disclose prior, pending, or threatened legal or administrative proceedings that affect the business.
ORGANIZATIONAL CHARTS
Prepare an organizational chart that shows how the company is run, and provide a list of employees for the past few years, as well as payroll information.
HUMAN RESOURCES
Potential buyers also will want to know about employee turnover, current (and promised) benefits, health and safety compliance, and workers compensation claim history for the company.