How Business Buyers Get Swindled: Due Diligence Red Flags

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by a professional from Harvard University - Harvard Business School
in Atlanta, GA, USA

1yr ago

How Business Buyers Get Swindled: Due Diligence Red Flags

Originally recorded with Jaryd Krause on the Buying Online Businesses Podcast. ►EXECUTIVE SUMMARY 1) RED FLAGS ARE MANY SMALL THINGS: Rarely one big problem. It takes a skeptical eye to see the pattern. 2) SELLERS TELL STORIES INSTEAD OF ADMITTING FLAWS: Sellers resist reasonable requests like strong non-competes and management interviews. That resistance is data. 3) CHEAP ADVICE IS EXPENSIVE ON A SEVEN-FIGURE DEAL: Shortcuts in due diligence lead to costly mistakes. Be ready to walk away if the seller won't be transparent. ► CHAPTERS 0:00 The true cost of buying a business wrong 2:16 From Harvard to M&A 4:14 Due diligence for online vs brick and mortar businesses 7:06 Why you verify every seller claim 9:52 Inventory and ad spend red flags 17:05 Testing the seller's time commitment with a strategy meeting

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