The importance of performing due diligence

The importance of performing due diligence

| Feb 24, 2021 | Business & Commercial Law |

If you are trying to acquire a company in Washington, D.C., it is important to learn as much as you can about that entity before the acquisition becomes official. The due diligence process allows you to get a better idea about that entity’s strengths, weaknesses and overall ability to add value to your existing business.

Never take what the current owner says at face value

As a general rule, those who are trying to sell something tend to highlight its positive features and minimize its negative features. Taking steps such as talking to employees, reviewing an acquisition target’s financial records and reading customer product reviews can help you verify anything that the seller has told you about the business. Even if a seller is completely honest about the state of his or her company, it’s still important to do your own research.

Take as much time as you need

The due diligence process can take days, weeks or months to complete, and the exact timeline will depend on a variety of factors such as your ability to gain access to relevant information in a timely manner. Your attorney, accountant and other key advisers may help you obtain financial statements, deeds to buildings or other documents needed to evaluate a merger or acquisition.

If you are planning to acquire another company, it may be beneficial to have an attorney assist with the process of doing so. He or she might help ensure that the terms of the deal are to your liking and that the due diligence process goes smoothly. Legal counsel might also represent your interests during any disputes that arise throughout the acquisition process. An attorney may also be able to work with regulators to ensure that the deal conforms to federal law.