Due Diligence is the process of investigation of the business’ financial and operational performance by the contracted buyer. The signing of the conditional Sale and Purchase Agreement is still only half way through to completing the transaction. The buyer and their respective advisers must now complete the process of Due Diligence. Now is the time for you and your advisers to verify that the information received supports the conditionally agreed to sale price. Basically, this clause means that you can complete a thorough investigation on the business in its entirety. The normal time frame to complete a Due Diligence process is approximately 10-15 working days. In some instances, a longer Due Diligence process is required depending upon the complexity of the business or other requirements such as Franchise approvals. Until the point of signing the conditional agreement, your professional advisers normally have had minimal input. You and your advisers usually have made a judgement call based on the information presented by the seller, both verbally and that contained within the information memorandum. There will always be points and issues that will require further clarification and the real challenge in the due diligence process is finding common ground between the parties. The buyer and seller and their respective team of advisers need to work together to solve the inevitable difference in positions. Once all the conditions contained within the Sale & Purchase Agreement have been satisfied, you will instruct your solicitor to confirm that the agreement is unconditional. The checklist on the following page highlights the key areas of Due Diligence investigation. DUE DI L IGENCE eieio.co.nz
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