As a self-funded searcher who pays for DD costs?

by a searcher from University of Chicago

4 years ago

I've found a deal, but with regards to DD (accounting and legal) do I front this cost knowing that perhaps the deal dies and I'm out those funds, or can I ask my equity investors for help with funding this cost?  Any creative solutions that people have used?

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searcher from University of California, Berkeley - Haas School of Business

Searcher pays. Unless you structured something with your backers that states otherwise i.e.: X dollars or Y% of transaction for closing fees.

3 years ago | like reply | 0 likes

searcher from Columbia University - Columbia Business School

Joseph, I had 5 restaurants under contract in March. Eventually pulled out due to COVID. However, I think you underestimate yourself. I hired a an offshore company to retype all the bank transactions into an excel spreadsheet and Matched it to the POS printouts and P&L's. All told, it was about 1000 dollars and lots of personal hours but I wouldn't have trusted any due diligence firm bc I was personally guaranteeing a large loan. They don't really have skin in the game.

That being said, always good to have someone else you trust look at it.

Match revenues to bank statements to financials to tax returns. That should give you a pretty good idea. My $.02

3 years ago | like reply | 4 likes

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