Too often, technology companies seeking a profitable exit make the flawed assumption that the due diligence process resides solely in the hands of the buyer. This assumption can lead to fatal mistakes that can undermine value, slow the process, or even kill the deal.
The reality is, as a selling company, you have an enormous opportunity to shorten due diligence timelines and maximize the value a buyer assigns to your company. Conversely, waiting to address the rigorous demands of the due diligence process until a buyer is already at your door puts an incredible demand on you and your resources and can create the perception that you’re unprofessional and that your company may have operational difficulties.
Being prepared for the exit process means that everything a buyer will want to scrutinize—contracts, employee records, customer agreements, compliance documentation, HR and IP issues, etc.—is accurate, up to date and organized in a way that makes it easy to review. The best way to collect this documentation is by using a due diligence checklist. Due diligence checklists are fairly extensive lists of all the items a buyer will likely want to see prior to acquiring your company in order to ensure they’re getting what they think they’re getting and to avoid any liabilities that might cause problems in the future. The best way to present this information is in a well-organized, full-featured virtual data room.
Although a buyer will most likely have their own tailored due diligence checklist, don’t wait. The best approach is to begin the process now, even if you don’t believe an exit is on the horizon. Use the sample due diligence checklist provided here to ensure that everything a buyer wants to know about your company is available and organized in a secure virtual data room for easy review.
Remember, being exit-ready is not just about being prepared for the rigors of a buyer’s due diligence, but is also critical to the health and growth of your business on a daily basis.
One of the most common uses of ShareVault is for organizing important documents for review during the due diligence process. ShareVault offers high-end features and functionality that make a professional impression on potential buyers, combined with the ease-of-use and quick set-up expected by all participants in the due diligence process.
Ally van den Herik is Director of Marketing at ShareVault. She holds an MBA from UC Berkeley and an undergraduate degree in Biology from Stanford. She has more than twenty years' experience in online media, after having taught herself HTML in 1994 while in business school. Her first job was as the Product Manager for Family Tree Maker Online, now Ancestry.com. Prior to ShareVault, she has worked for Websense, an online filtering company, BidPal, a wireless silent auction fundraising tool, The Cambridge School, and her own Internet Marketing consulting firm.
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