DUBLIN, CA – 28 Apr, 2017 – How much time should the buyer of a small business be given to complete the due diligence process that will determine whether the deal is cancelled or goes into escrow? That’s the problem small business sales professionals are talking about in the most recent virtual discussion on BizBen.com. The question was posed by Peter Siegel, BIzBen Founder and director of the company’s Probuy/Prosell program offered to participants in California’s business for sale market.
While Siegel pointed out the due diligence period ordinarily is between 4 and 14 business days following acceptance of an offer, business broker Raj Parikh, based in the Inland Empire, pointed out the time period might be longer if the seller is slow at providing financial and other information the buyer needs to conduct a satisfactory examination. And Joel Miller, a business broker and consultant in the elderly care services industry, commented that if the due diligence period isn’t carefully observed it may result in renegotiation of the purchase agreement.
Siegel explained that due diligence is the opportunity expressed in a small business purchase agreement for the buyer to verify information about a business, particularly its financial performance, that was provided by the seller during the buyer’s introduction to the offering. “Due diligence is not when a person possibly interested in a business learns its basic characteristics,” Siegel explains. “Fundamental facts about operation and financial performance have usually been revealed before negotiations begin. And if the buyer is then not satisfied with what’s found during due diligence—that the facts discovered don’t correspond with representations of the seller– the purchase agreement usually gives him or her the right to cancel the deal.”
“At issue in this discussion, “Siegel explained, “is how much time the buyer should have to conduct that due diligence. It should be long enough to complete the investigation, but not extend beyond a reasonable amount of time needed. An unnecessarily long due diligence period hampers the seller’s ability to look for other buyers. What constitutes a ‘reasonable due diligence period’ can vary depending on circumstances related to the deal. And that’s an important issue without a simple answer. An issue that can create a disagreement between parties.”
The full discussion with opinions contributed by several industry experts is found at:
About BizBen.com and the BizBen Online Network:
BizBen.com (and the BizBen Online Network) has been established online over 23 years and currently lists over 10,000 active California small & mid-sized businesses for sale, businesses wanted to buy, blog, discussions, vlogs, podcast, and resources (advisors and consultants) for buying and selling California businesses. Peter Siegel, MBA is the Founder and Director of BizBen.com & BizBuyFinancing.com and consults daily with business buyers, owner/sellers, business brokers, agents, small business advisors on the topic of buying and selling businesses throughout California.
For More Information:
Contact: Peter Siegel, MBA (BizBen Founder & Director)
Direct Phone: 866-270-6278
BizBen.com/BizBen Network is also available via:
Company Name: BizBen.com – California Businesses For Sale, Wanted To Buy
Contact Person: Peter Siegel, MBA
Country: United States