Preparing for due diligence
Whether a company is seeking private financing, participating in an acquisition or undertaking a public offering process, the other parties to the transaction will conduct a due diligence investigation of the company in varying degrees. Due diligence is the process of independently identifying and verifying information that either must be disclosed in offering or acquisition documents or is otherwise relevant to an understanding of the company’s business. Due diligence may also include an evaluation of the company’s operations, management, finances, accounting, legal matters and prospects, and, in an IPO process, an assessment of the company’s readiness and ability to function as a public company. A due diligence investigation will vary in scope and comprehensiveness depending on the transaction in question—a follow-on investment by existing investors may require little, if any, due diligence, while the due diligence process in an acquisition or public offering is aimed at leaving no stone unturned.
Selling your company
Preparation is fundamental to success. Here are some things you can do before the M&A process has begun in order to improve the outcome:
Hiring an investment banker
Whether to hire an investment banker really depends on your particular circumstances; it’s basically an investment decision. Investment banking fees can really add up, and most investment banks charge a substantial minimum fee so it makes good sense to really consider what you get in exchange for the fee you pay. As with most decisions involving M&A, you need to carefully assess your specific circumstances; however, here are some general considerations you will likely want to consider:
