Due diligence can be an intimidating concept for sellers. The idea of a potential buyer rummaging around in your affairs in order to verify your representations probably sounds about as appealing as an IRS audit. But buyers aren’t trying to make your life difficult – they’re just trying to ensure they’re making a wise investment. The easier you make it for buyers to find the information they need, the easier the process will be on you and your limo business for sale.
Have you ever invited friends over to the house and quickly cleaned up by shoving your dirty laundry into another room and shutting the door? That’s not how you want to handle due diligence. Cleaning up your financials before the process begins will make for an infinitely more pleasant and rewarding experience. Not only does disorganization reflect poorly on your chauffeur business, but it can also give the impression that you have something to hide. Before you even list your limo company for sale, you should have your CPA and perhaps a transaction attorney review your financial and tax information to ensure documents are as clean and clear as possible.
Understanding the way your company works is essential for any prospective buyer. While they may not plan to operate the company exactly like you, they will need to verify that the business can continue to thrive under their leadership. Documenting your company’s policies and procedures makes it easier for a buyer to get a feel for how your limo business operates, from the technology you use to the way customer and employee relationships are maintained.
While due diligence is meant to be a period of investigation, it’s ideal if the buyer doesn’t uncover any unexpected surprises. Sellers should be upfront about any major issues facing the business, from pending lawsuits to unpaid taxes. Business owners may worry that unpleasant information will scare away buyers, but it’s far better to lose a buyer before the letter of intent has been signed than after they have had exclusive access to your most sensitive business information. Assume that if an issue exists, it will be discovered during due diligence. The more information you provide upfront, the more the process will serve to validate your company’s value.
While due diligence is a normal and necessary part of any business sale, it’s not without its risks. There’s still time for a buyer to back out during this process, but not before disrupting business operations, threatening the security of your business, and potentially impacting the viability of your planned sale. A professional limo business broker can protect the interests of the seller by establishing a controlled environment and ensuring a strong letter of intent is in place before the process has even begun. When performed correctly, due diligence isn’t a burden but a chance for the buyer to confirm the potential of limo business profits and for the seller to move one step closer to a satisfactory sale.