Due Diligence: How to Uncover Any Problems Before You Buy a Business in NJ
Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, A New Jersey Buying a Business Attorney
Due diligence is probably the most critical stage when buying a business. Many prospective buyers for some reason limit themselves during this period to strictly a financial analysis, but due diligence goes far beyond that. Due diligence requires a complete investigation of the entire business.
One of the keys to buying a profitable business is discovering and understanding the intimate details of the business. Its strengths, weaknesses, pluses, minuses, growth opportunities and areas of operation. If you do not perform a detailed due diligence by gathering a lot of diverse information, you enter into a transaction at your own risk!
Start Your Due Diligence By First Creating a Checklist
You must make sure to uncover as much as you can reasonably find about the business BEFORE you buy it. You do not have to meet the seller or even visit the business for your research to begin. The Internet is an incredible tool that will allow you to investigate the business, the industry, the competition, the marketing, the suppliers, and on and on.
A couple of things to keep in mind…
Allow yourself enough time:
Many sellers insist on a very short inspection period; sometimes just days. Don’t get pressured into this – give yourself sufficient time to complete this process. You should not settle for less time than you comfortably need to complete a thorough inspection/due-diligence period. A financial review can usually be done in days (except around April 15th if you plan on retaining an accountant) but there is more to investigate and that is why a 30-45 day due diligence period is not unreasonable for larger businesses, while a 30 day period (in my opinion) is reasonable for a smaller business to move the deal forward to a successful closing.
Do you have a question(s) about the due diligence process as part of buying a business in NJ? If so, contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at firstname.lastname@example.org to schedule a consultation about your pre-business purchase questions. He welcomes your calls, inquiries and in-office consultation and you’ll find him very approachable and easy to talk to.