What happens during due diligence and how long does it take?
By Adam Friend | Senior Vice President of Business Development
During due diligence, we gather financial, operational, and legal documentation and information that helps us understand your business better, confirm the valuation we have proposed, inform the legal documentation of the deal, and plan for the integration of your business into Veritext. There are quantitative and qualitative aspects to diligence, and it can take anywhere from 6-12 weeks depending on the size and complexity of the business. While all processes are different, it certainly takes substantial time to gather information and respond to requests, all while you continue to run a business. It’s not easy, but it’s a part of any sale process and it’s worth the effort to get to a successful closing.
In some cases, we perform all diligence with our internal team, and for larger opportunities, we involve third party advisors such as an accounting or law firm. On your end, most sellers are heavily involved personally but will require the help of an outside accountant, legal advisor, and sometimes additional staff members. It’s generally wise to involve as few internal people as practical in the diligence process, but often you may need to involve your internal controller (if applicable) or IT staff to the extent you don’t have access to all of the information required.
At Veritext we take pride in doing what we say we will do, and our goal is to close the transaction based on the terms we propose in the letter of intent (“LOI”). Due diligence is confirmatory in nature and primarily focused on making sure we plan for a smooth integration that is seamless for staff, subcontractors, and clients.