Due diligence processes can sometimes overwhelm sellers who need to focus on more important aspects of transactions. Being constantly inundated by emails from potential clients/customers who want more info, sometimes asking questions that don’t really need answering at that time, can be extremely frustrating.
Best tips to make your Mergers and acquisitions due diligence easier
If you want to keep your sales moving forward without any delays, then you must be aware of what to expect and how best to react when things go wrong. Due diligence includes an analysis of risks associated with any investment decision; a review of legal requirements; and a determination of whether there are adequate financial resources available to meet potential obligations. It involves gathering relevant facts and making sure they’re accurate before proceeding further. There are several ways to handle due diligence effectively.
Tip #1: Consider a Pre-Transaction Review
Have your law firm look at your books, records, and contracts for any errors or omissions. Before any negotiations start, be sure to get everything ready for when they begin You need to know what kind of information the potential buyers may want so they don’t miss out on anything important. When you’re in the thick of things, you’ll thank yourself for doing this.
Tip #2: Provide Complete Responses
Most buyers will want to see every document related to their business before they sign anything. They may even ask for copies of documents not included in the package. Before scanning any documents for an electronic discovery request, double-check to ensure that they’re up to date and contain all required materials. Be certain that the buyer’s attorneys will return and hound you if something isn’t included.
Tip #3: Allocate Responsibilities
Determine who has primary responsibility for each task and then decide which tasks fall under their purview. Businesses often hire professional document scanners to scan and upload all the documents they need for tax purposes. Other lawyers send out piles of unorganized documents and files to be sorted by junior associates. Some people use both approaches simultaneously. Make sure that people know which person uploaded the document.
Tip #4: Use Reference Numbers and Descriptive File Names
Consider numbering and labeling your files before scanning them so they’re ready for use when needed. You’re going to need to name each image appropriately so that they match up with their corresponding number. For example, if you were naming images for a gallery of photos from an event, then you’d want to give them descriptive titles starting Like any other part of life, the file names “Scan00010” and “Scan00100” are useless to anyone who wants to look at them. They’re just confusing and inefficient. Use something else instead; for example, call it “Tennessee Real Property Lease”.
Tip #5: Always Load It in the Data Room
You shouldn’t assume that just because you sent an email to someone who was part of the transaction, everyone else involved in the transaction saw it. Even though some parties might ask for an electronic copy of certain documents, put them all into the data room so they’re available when needed.
Additional Tips
Keep an eye out for when you’re at different stages of the sales funnel and adjust disclosures appropriately. Give each customer an ID number so that they know which one was theirs when you’re ready to give out their names.