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SALIENTVALUE


Due Diligence Is A Two-Way Street

In the process of a business transaction most buyers conduct a due diligence review of the seller’s company.  While it can be argued that due diligence begins from the first contact, there is typically a due diligence period that begins when parties sign a Letter of Intent (LOI) and initiate the development of the Definitive…

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The Holdback Provision

Buyers of any business instinctively look for ways to mitigate their risk.  They may insist on an asset purchase vs. a stock sale to avoid inheriting potential corporate liabilities, when possible.  They may require a “tail” in the seller’s current liability insurance policy.  They will try to identify all likely liabilities for the future and…

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The Letter of Intent (LOI): 6 Functions

When we work with sellers the subject of the LOI can be one of the most confusing. Why would I sign a non-binding agreement to sell my company? Very simply, it’s a starting place for the commitment to execute a transaction. If you can’t (or won’t) agree on an LOI, it is very tough to…

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The Starting Place: A Letter of Intent (LOI)

Most business owners only sell one business in their entire lifetime. Thus it can be an emotional and intimidating process unless it is broken down into some very basic elements. One of the early steps in a typical transaction is receiving a Letter of Intent (LOI) from a potential buyer. The purposes of the LOI…

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Due Diligence (Part 1): Basic Elements

The term “due diligence” first came into common usage after the stock market crash of 1929.  Prior to that time, many sellers of equities marketed stock without investigating the economic soundness of the companies involved.  The Securities Act of 1933 required that brokers conduct a “due diligence” of their future offerings and that they disclose…

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Due Diligence (Part 2): 6 Ways To Make It Successful

Many sellers report that the due diligence period is the most difficult part of the transaction for them.  Potential buyers ask for volumes of information that may seem irrelevant.  Different buyers may ask for different types of data.  Sellers may have to gather much of the information themselves because they want to keep a potential…

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Cleaning Up After Closing – 7 Examples

Many sellers are surprised how much they are engaged after the closing of the transaction.  Isn’t the closing the end of the transaction?  The simple answer is that the closing takes place at an arbitrary point in time (e.g. the last day of the month to facilitate a payroll transaction), but there are almost always…

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