06 Dec Managing the Due Diligence Process
One key function of Oak Capital Advisors, as a business broker, is to successfully manage the the due diligence process while the owner (the seller) continues to focus his attention on operating and growing the business during the transaction. A potential buyer will want to analyze both the operations and the financial results for at least the most recent three years – and if the transaction is near the end of the fiscal year, that statements for that year as well. The potential buyer should be very attentive to the owner attempting to inflate in the short term sales or cash flow to impact value. Many owners include personal expenses, which, if done in excess, can cause problems, as lending institutions will challenge cash flow assumptions and the resulting value of the business. A clean tax return is a positive when selling and valuing a business. Oak Capital Advisors will use its expertise to calculate and verify Seller’s Discretionary Earnings, or cash flow. Other questions that Oak Capital will assist in addressing are how will the current staff react to the transition? And the customer base? Does the business have a concentration of customers? Are sales dependent upon the owner’s personal relationships? Is there a lease or purchase of real estate that must be addressed? Oak Capital Advisors managing the due diligence process, addressing these and other questions, will help the business owner to maximize the value of his business.