Part II – Seller: Guidance for small- and mid-sized organisations
The process of due diligence typically involves a thorough investigation of the business from many vantage points. The understanding of due diligence is best summarised by Black’s Law Dictionary as “the diligence reasonably expected from, and ordinarily exercised by, a person who seeks to satisfy a legal requirement or discharge an obligation.”
Due diligence is usually thought of as the long list of items the buyer must consider and verify prior to purchasing a business. It’s true that the buyer has a special and enduring duty to thoroughly examine the target company because he or she will have to live with the purchase decision if the deal is completed. The seller has a much lighter due diligence load from a purely technical or legal viewpoint. Most sellers enter into negotiations and possible transactions woefully unprepared to discuss the deal with an experienced buyer.
The checklist in this tool is intended to be both a learning and an educational tool and not a legal document. The purpose of this checklist is to illustrate a sample document with the more common issues related to the due diligence process that a seller of a company should consider.