We may still be disappointed when a due diligence exercise reveals what a mistake the purchase of a particular property or business would have been. It can be difficult to overcome the excitement and anticipation of a new home, investment or business, even though your lawyer shows you that you may have just “dodged a bullet”.
We quickly overcome such disappointment, particularly considering the pain if the purchase had gone ahead. That disappointment also rapidly disappears when the next opportunity comes along backed by data that shows it is likely to be a very good purchase.
Having good information at hand can help you avoid a lemon and can give you the edge to purchase with confidence.
The appropriate due diligence process will depend on the type of asset being purchased, the price and a variety of other factors. The level of investigation undertaken for the purchase of a manufacturing business with hundreds of employees will be somewhat different to that for the purchase of a delicatessen. Large due diligence exercises may involve an extremely detailed examination and audit of different aspects of a potential property or business acquisition.
We have been involved with many sales and acquisitions ranging from simple to extremely complex. We can tailor a due diligence investigation to match the risks involved with your proposed purchase, your budget and your expectations. We can help interpret the results into something meaningful and give you the benefit of our significant experience.
A due diligence exercise may involve:
- Obtaining and interpreting relevant searches;
- Creating an appropriate questionnaire for completion by the Vendor or its officers;
- Instructing specialist experts to advise on aspects of the property/business;
- Environmental enquiries and (if appropriate) testing;
- Inspection of relevant documentation;
- Advising on contractual obligations associated with the purchase;
- Examination of employee records; and
- Audit of assets.
Relying on your “gut feel” may work a lot of the time but if you want to avoid a lemon you can significantly improve your chances by undertaking an appropriate due diligence exercise and getting good advice.
For further information please contact Danny on 8362 6400 or email Danny Beger. Join our mailing list to receive updates and advice on current issues.
