Buying a business is an exciting but major undertaking. Business ownership takes dedication, time, sweat and money.
If you are thinking of merging your business with another business, you should have many questions. Is the other business who they say they are? Are the financials supplied by them real or was this information manufactured? Will this business still be around in a few months if you do not merge? Will existing litigation in which this business is involved bankrupt the business – and yours if you do decide to merge? What risks are you exposed too?
There are many variables that need to be considered before you buy a business or before you merge your company. Your existing business took many years to build and probably a lot of tears and sacrifices to get to where you are now. Maybe you are considering investing your life savings and pension into a new business venture?
Recently, in a matter of ours, our Client was in the process of buying an existing business that looked great on paper. When we started our due diligence investigation we discovered that this business’ lease agreement was coming to an end and the seller knew the lease would not be renewed. The Seller was ‘dumping’ the business on our Client who would have suffered a major financial blow if she had proceeded with the purchase without a due diligence investigation.
If you are considering buying a business or merging your existing business with another business you must conduct legal due diligence. This is an absolute necessity!
As Corporate and Commercial Attorneys we assist our Clients with legal due diligence investigations when they want to buy a business or merge their company with another.
These investigations include us looking at issues such as:
Business Entity / Corporate Recor
Intellectual Property / Transfer of Assets
Employment and Human Resources matters
Property and Assets
It is also important to do a Financial Due Diligence Investigation by experts in this field. We have existing relationships with Financial Experts so that the legal and financial due diligence investigations can be done simultaneously.
When you buy a business or merge your existing company with another you need to “Trust but Verify”. A quote made famous by President Ronald Reagan.
After the Due Diligence is completed, the buyer or the person who is considering a merger may decide not to proceed with the transaction, reduce the Purchase Price or simply build in contingencies in the Purchase Agreement.
The above is not an exhaustive list of Due Diligence topics as these investigations are tailored for specific businesses.
It does not matter about the actual size of the transaction, it is essential that Due Diligence investigations are done to protect the buyer or to safeguard your company when you are planning a merger.
Contact us before you commit your lifesavings into a business. We are happy to assist you with this important decision.