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Los Angeles: Lemons are great to eat, but not to buy |
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| California business brokers stress the importance of due diligence For Immediate Release June 23, 2008 (San Jose, CA) – Even those who like surprises don’t want to find out they’ve made an un-wise decision in purchasing a business. Due diligence can make sure California business owners aren’t eating the costs of a lemon – a bad business deal, that is. “Especially in our tough economy, buyers should be putting more emphasis on the preparation of purchasing a business,” said Ron Hottes, president of the California Association of Business Brokers (CABB – a professional, non-profit trade association) and president of Business Team LA and Business Team SoCal. “There may be some problems with the business and the only way to truly know what you’re getting is by taking the time for due diligence.” Due diligence is the process of researching and analyzing a company before a business transaction. The financials of the business are a key component of the process. Due diligence should also include a review of all documentation including the legal structure of the company, insurance policy records, personnel policies and marketing materials. Other items to importance include the company’s culture, strategy, leadership and competencies. “There’s no denying it’s a complex, time-consuming process,” said Hottes. “It may take weeks to compile and review the information. But, with so much on the line, you shouldn’t make a decision without all of the information.” Hottes says it’s important to keep the following in mind for a thorough due diligence process. Assemble a team Buying a business isn’t a task that one should undergo alone. An experienced team of experts, including an attorney, accountant and professional business intermediary, can assist the buyer with the process, helping to review and evaluate the documents and information received. Keep an open mind While it’s important to remain focused, a buyer should keep an open mind. “Due diligence is there to make sure everything is in order,” said Hottes. “Be sure you get all of the information you need, but don’t assume that you’ll find something wrong.” Although due diligence takes time, Hottes says it’s a critical aspect of business acquisition. “Your decision to buy depends on the results of the due diligence process, so it should be considered the foundation of the entire deal,” he said. “There’s nothing worse than someone skipping this step, purchasing a business and then finding out they got a bad deal.” ### The California Association of Business Brokers (CABB) is a professional trade association dedicated to promoting the growth and professionalism of the business brokerage community within California. CABB is the largest organization of business brokerage and merger and acquisition specialists in the state, with more than 450 members. Founded in 1986, CABB was organized to recognize the professionals of business brokerage, to help educate the public on the benefits of using licensed intermediaries and to establish a code of ethics for all members. Media Contact: Susan Finco - Leonard & Finco Public Relations (920) 965-7750 ext. 158 |
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