The Role of Due Diligence in Business Transactions
Due diligence serves as a systematic process aiding buyers and sellers in determining the viability of a business transaction. This involves meticulous scrutiny of documents, including financial statements, tax returns, and lease information. While tangible purchases like homes may require minimal due diligence, buying a business demands the evaluation of numerous intangible variables, making the due diligence period variable and typically lasting 4-5 weeks for small to mid-sized businesses. Unsatisfied buyers retain the right to negotiate a reduction in price based on due diligence findings.