Buyer Due diligence is the most sensitive time in any business transaction. Several of the buyers cut corners or don’t have the correct information to make an informed decisions based on data collected. We have few lists on buyers due diligence that you shouldn’t skip.
As a buyer, you must ask for all the business documents including
- Business Registration
- Health Certification (for food and restaurants related)
- Medical Certification (for Labs and Hospitals related)
- Tax paid documents
- Tax filing documents
- Any penalty or liability on the business
Business is all about location, location, and location. If it is not a high traffic location; business will suffer. Unless you are a special and unique business which doesn’t require front face of the high street or main street. Things to watch…
- It is a left or right corner place?
- Is it a sandwich location and other businesses on each sides?
- Where is the sun reflecting?
- How is the air flow?
- How much vehicle traffic occurs in daytime and in nighttime?
- What is the population of the location in the daytime and the nighttime?
- If it rains, then what is the flow of the rain water?
- Is the location ground floor?
- If ground floor, is there any water leakage from the top floors?
- If the location is first and above floors; then is the lift available?
- How’s the electric situation?
- How’s the water situation in the location?
A buyer must know about its neighbours and physical appearances.
- Have you met the neighbours?
- Have you asked neighbours about the business you are trying to purchase?
- How’s the front face and the back?
- Any renovation? required?
- Does it require any thing change?
- Does the business has signs?
- Can you have more signs outside?
Sales Turnover for Buyer Due Diligence
This is the bottom line for any business. If no sales; then no business. As a buyer, you must ask the seller of the business financial documents. It can be non-audited and audited financial documents. You also need to check these documents with government and your own tax accountants.
If the sales are higher for one specific product then find out what is so special about that specific product. If you are purchasing an old business; you can find out number of products and services they have.
As a purchaser, buyer due diligence also requires to find out what the reviews has for the business.
- What customers say about the business you are buying?
- How many negative and positive customers?
- What were the past suggestions and feedbacks from the customers?
- How will you resolve any issues with past, current and future customers? Make a list!
Business Price Trends
The business you are purchasing; you need to compare it with other business in the same category. For example, what is the price of a dairy shop in that locality? How far are other shops? The distance they cover between each shops. Find out the number of same category in the area.
Go to Business
Go to the business that you want or need to purchase. Look at the environment, the staff, the cleanliness, the staff member’s attitude, customer’s attitude and more. It is to the standard that you need? Find out the weaknesses and strength. Do a SWOT analysis.
Local Government Research
Whatever you are trying to purchase; you need to make sure that it meets local government zoning. Does it mean? You need to make a list of questions to ask from a government representative. In fact, if you go to a government office, they will help you out more easily.
What insurance will cover in case of fire and damage? Find out the liability insurance. Find out the past damage report and insurance report, if there is any.
Chaynuk provides business listings. You can easily sell your any virtual or brick and mortar business, such as pan khoka, chai dhaba, any shop, clothing store, medical labs, xray labs, diagnostic labs, hospitals, showroom businesses.
Easily register yourself with Chaynuk and add your listings. We will help you sell it. Please contact us.