Happy Monday - we're getting after it today with part 10 of my #smb #acquisitions for #newcomers. At this point in the journey, we're going to zoom in on the due #diligence process. Here are 6 things people entering our space should know:

1) Communication is key: The most effective buyers typically start building their diligence teams early in the process, often even before they have a Letter of Intent (LOI), and frequently ask questions about procedures, timelines, and budgeting.

2) Focus on "deal-breakers": Buyers should start by conducting an initial assessment of the business, focusing on identifying how the business generates revenue and what factors could potentially disrupt this revenue stream.

3) Start with financial and legal experts: Financial due diligence is critical for understanding a business’s fiscal health, while legal counsel is essential for navigating the complexities of the acquisition agreement.

4) Set expectations: When managing their deal team, buyers need to set clear expectations and roles for each service provider, ensuring regular updates and open communication lines.

5) Prioritization, not cost-cutting: Buyers should not think in terms of quality versus cost, but rather prioritize the crucial aspects of due diligence. They can also save by working with individual professionals or smaller firms that offer quality services at lower prices.

6) Don't forget lesser-known diligence items. Some checks that can help buyers include an analysis of:

- Real estate condition and leases

- Other asset inspections and valuations

- Insurance and existing coverage

- Personnel and HR diligence

- Industry-specific trends

Hope this was helpful! I'll share a couple more of these posts before we wrap up the month. Make sure to give me a follow and check out the work we're doing at Private Market Labs to make this process easier!