Prospective buyers must look closely at several different aspects of the business before even considering the purchase of the company. These aspects include a physical inspection, which means ensuring that the company is up to safety, building, and health codes and that it meets all requirements set forth by the federal, state and local governments. Building inspectors and other professionals can help in this task, but this physical inspection is only one part of the total picture.
The other aspects of due diligence are more complicated than the physical inspection, and because they are more involved, they require serious attention to detail. For those with limited prior business experience and even for those with business experience who know the value of extra precaution, lawyers, accountants, and other advisors are invaluable when doing the meticulous work of due diligence. Experienced lawyers, accountants, and other advisors are accustomed to dealing with due diligence cases and are familiar with the laws in their local areas and personal fields of expertise. They can be valuable guides on the path to setting up a successful business.
The list of areas and issues to look at when doing due diligence is rather extensive, and includes litigation status, tax status, intellectual property status, environmental status, financial status, and supplier-business-customer status, regulation status, employee status, and liability status of the company.
