Due Diligence and the Business Transaction: Getting a Deal Done
Jeffrey W. Berkman
Format: PDF / Kindle (mobi) / ePub
Due Diligence and the Business Transaction: Getting a Deal Done is a practical guide to due diligence for anyone buying or selling a privately held business or entering into a major agreement with another company.
When you’re buying a business, it’s wise to conduct due diligence. That's the process of investigating and verifying the firm’s finances, labor record, exposure to environmental issues, store of intellectual property, hard assets, ownership structure, and much more. If you don’t, you may later stumble into serious, costly problems, or you may pay an inflated price for the business. This book not only shows you how to conduct such an examination and what to look for, but it will also help you uncover hidden issues that some sellers might not want you to know about.
Conversely, this book shows smart business sellers how to conduct due diligence on their own firms to arrive at the right sales price, uncover issues that might scare off buyers or investors, solve lingering problems before a sale, and more. Done right, due diligence can help sellers ensure they sell the business for the best price and with the least risk. Due Diligence and the Business Transaction will help you understand when to conduct due diligence, whom to include, and how to spot the red flags that signal danger. In addition, you will learn:
- How to conduct due diligence when contemplating a joint venture, business loan, franchise opportunity, or manufacturing deal
- How to calibrate the correct scope and breadth of the due diligence investigation depending on your situation
- How the results of due diligence may and often will change the elements of the final deal
- How to draft due diligence documents so they protect your interests
- What successful deals look like
Corporate attorney and due diligence expert Jeffrey W. Berkman interweaves critical action points, guidelines and procedural steps, case studies, and due diligence questionnaires, checklists, and documents. The veteran of many business deals, Berkman's advice will help you avoid business-crippling mistakes and make the best deal possible.
contractual relationship with the retailers in the ABB transaction, the auto body shop likely is on a cash basis or has a credit arrangement with suppliers – and thus there are no supply contracts to be assigned. The purchaser would set up its own relationship with these suppliers. 4. Do the assets work? • ABB: Does the ABB software function properly? The purchaser would want the software tested by an expert to ensure functionality since it is the crown jewel of the transaction. • Auto body
the company? • Does the company own any U.S. and international patents, trademarks or other intellectual property? • Are there any licenses from third parties that may terminate on change of ownership? • Are there any contracts, leases or other significant agreements that terminate on change of ownership? • Does a change in ownership create any issues regarding existing customers with respect to privacy or other issues? • Do the actual individual sellers of the membership interests have a
important in a closely held business? These companies tend to have an ownership base built on relationships among or contributions made to the business by the owners. Consider how unsettling it would be for the partners in a small business to learn the membership interests of a deceased partner have been transferred to a drug-addicted ex-spouse or that a bankrupt member’s interests are being auctioned off to satisfy her debts. Buy–sell provisions are necessary to prevent the equity ownership
advance, its purpose, repayment terms, and, if applicable, a copy of any promissory notes or agreements related thereto 16. All filings with and material correspondence to or from the Department of Labor, the IRS, or any other government agency related to employment or labor issues 17. A description of any union organizations or membership drives that are threatened or pending, or that have occurred 18. All Equal Employment Opportunity Commission (EEOC) compliance files and notices of
buy–sell agreement that addresses disability, death, or withdrawal of a member. Include buy-sell provisions in the revised LLC operating agreement or prepare a separate buy–sell agreement. Purchase key man insurance as well as insurance to fund a buyout in the event of death or disability of one of the partners. Both the business and the property where the music store is located are owned by the same LLC. Transfer the real estate to a new entity to eliminate potential exposure to the