When pursuing a potential business acquisition, a buyer should have specific criteria in mind in defining the ideal target company. Once a buyer has located the potential prospect, a low cost, high level due diligence should be performed. This initial act of uncovering information can be referred to as the preliminary due diligence process. In this stage the prospect will provide information with minimal supporting evidence as this is more of a cursory review to help evaluate whether to take the next step in the formal, more detailed due diligence process down the road.
Preliminary due diligence should occur after the buyer has determined that the targeted business meets certain characteristics. This can be accomplished during the initial search process by reviewing information from the business listing as well as from the Confidential Business Review (CBR).
The initial search process occurs prior to preliminary due diligence and should provide a high-level view of significant characteristics such as: (more…)Read More
Imagine your financial advisor telling you to invest 80% of your net worth into one stock. This may sound crazy, but small business owners are doing this every day.
It is well known that investment diversification is one of the more important ways to reduce financial risk to an investment portfolio. According to Investopedia, “diversification is a technique that reduces risk by allocating investments among various financial instruments, industries and other categories”.
For better or worse, the majority of net worth of a successful small business owner is most likely held within their own company.
According to the FPA/CNBC Business Owner Succession Planning Survey released earlier this year, an estimated 10 million small-business owners plan to sell their businesses over the next ten years. Most of these business owners are baby boomers. According to the study almost 80% of small business owners are relying on the proceeds for retirement. The scary fact is that the average small business owner is anticipating between 60% to 100% of their retirement needs will come from the sale of their small business.Read More