MPL General Counsel Corner – Devil is in the Details

The letter of intent is signed and now you want to look more into the deal.  What does that mean?  If you are the Buyer, do you just ask the Seller if business is going well and leave it at that?  Probably not unless you have some sort of magical insight.  Due diligence is one of the most parts of the whole buy/sell process because it is where you validate your assumptions or answer your questions about the business.  Below are some of the due diligence items that are most often reviewed:

• Financial
  • Income Statements, balance sheets and cash flow
  • Tax Returns
  • Inventory
  • Asset List
  • Bank records and reconciliation
• Legal
  • Organizational documents
  • State certificates of authority
  • Litigation
  • Insurance
  • Agreements
  • Intellectual property
  • Licenses/permits/regulatory approvals
• Operations
  • Key vendors
  • Customer lists
  • Marketing
• Employee
  • List of employees
  • Payroll info
  • Handbooks
  • Benefit plans
  • Employee contracts
• IT
  • Website/social media/email
  • Software
  • Hardware
• Environmental/Regulatory Issues

All of this should be ready to provide if you are the Seller and thoroughly reviewed if you are the Buyer.  The proverbial “devil is in the details” comes out in this phase.  Make sure you have a solid team of business advisors to help you through this process.

Here are a few other things that may be of interest:

• Economic Review: Q2 2022 – Silvercrest (silvercrestgroup.com) – Thanks for Sean O’Dowd for sharing
• Tax Proposals and Impact on Real Estate Investing (eisneramper.com) – Good overview of the tax proposals from the Biden Administration

Helpful Resource Pages

• Knowledge Center (eisneramper.com)
• Trout CPA Blog | Tax & Business-Related Topics
• News & Analysis | Littler Mendelson P.C.
• Insights, Analysis & Perspectives for Your Business | RKL LLP (rklcpa.com)
• NFIB Research: Data and Trends Affecting Small Business Owners | NFIB
• The Tax Warrior Chronicles (taxwarriors.com)

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com) or anyone in our office with questions or comments.  

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