What red flags do you look out for in a deal?

by an intermediary from Dartmouth College - Tuck School of Business at Dartmouth

5 years ago

What red flags do you watch out for when evaluating a company, both before and after an LOI is signed?

In full transparency, Tuck Advisors represents entrepreneurs who want to sell their company. We want to make sure that before we take on a client we're looking out for the same things you are. We also do a pre-M&A program for folks who want to sell in a few years, so to the extent possible we want to address those red flags during that program.

Thank you!  

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8 comments

searcher from Henley Business School

To prioritize something, I would very first check whether the seller is really motivated to sell and secondly, are sellers' expectations of enterprise value realistic and 3rd what is the level of integrity of the seller. Are figures, reputation and papers as they should?

3 years ago | like reply | 2 likes

searcher from Michigan State University

Big topic James. There are red flags for you before you should consider taking on a client. There are red flags for buyers during a pre-offer "sniff test". There are red flags in due diligence. There are red flags that are ephemeral, and have to do with murky impressions of the parties involved, and their specific situations, which have nothing to do with the facts of the business. PM me if you want to do some work drilling into this in a comprehensive way.

5 years ago | like reply | 4 likes

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