(We are exploring the recently released book, “The Exit Strategy Handbook” by Jerry Mills, the founder and managing partner of B2B CFO®.)
Mills spends a good portion of “The Exit Strategy Handbook” focused on the areas of due diligence that a buyer will want to review during the sale process. I highly recommend this section of the book as a primer for those who have not gone through a purchase or sale recently. There are many areas of review that buyers will want to explore. Failure to properly prepare for this review will lengthen the sale process, possibly reflect on the firms value and selling price, and could cause a potential buyer to withdraw.
To facilitate the due diligence process, Mills created dashboard software which includes over 200 common due diligence questions. This software can be licensed through any of the B2B CFO® partners. You can locate a partner at the website below.
I strongly encourage companies to consider building a secure library of key documents. My experience has shown that a tremendous amount of time is consumed during the early stages of the sale process just assembling important company documents. Developing an organized data room/ filing system for a firm can save valuable time. You can do this in a filing cabinet but assembling electronic copies of these documents will make it much easier to share them during the sale process. Reasonably priced electronic data room software is available from SmartVault and SecureDocs.
- Mills spells out the areas of due diligence in “The Exit Strategy Handbook”, exploring each area in tis own chapter. The list will need to be customized to your unique situation but whether you use the B2B CFO® dashboard software or your own filing system, these are areas you will need to review.
- General corporate information
- Management and employees
- Product and services
- Customer information
- Key vendors and service providers
- Intellectual property and intangible assets
- Technology, software and hardware
- Marketing, branding and public relations
- Related parties and minority owners
- Internal financial information
- External financial statements
- Contracts and leases
- Litigation and claims
I am certain that just reading this list has triggered thoughts about documents that might be hard to locate and has provided a sense of the breadth and scope of a buyer’s due diligence process. That is why Mills wrote “The Exit Strategy Handbook” and why every seller needs a Success Team™ to help manage the process while the owners continue to build and grow the business.
B2B CFO® has over 200 experienced chief financial officers have deep knowledge of transactions and business improvement that can be tapped to help you sell your business. You can explore the backgrounds of our team at www.B2BCFO.com/index.php?page=cfo-directory.
[i] Mills, Jerry L. (2013). The Exit Strategy Handbook. ISBN 978-0-09886932-1-0, Jerry L. Mills and B2B CFO, LLC., table of contents.