Due Diligence
Due diligence has been used since at least the mid-fifteenth century in the literal sense “requisite effort.” The phrase developed a legal meaning, namely, “The care that a reasonable person takes to avoid harm to other persons or their property.” Due diligence has extended its reach into business contexts, signifying the research a company performs before engaging in a financial transaction.
Legal due diligence is a critical part of selling your restaurant. First, the restaurant, together with its legal advisors, will identify hidden and potential liabilities throughout the due diligence process. Secondly, pre-transaction due diligence provides a restaurant with the opportunity to prevent a purchaser from ignoring the value of a business due to the absence of proper company housekeeping. For instance, a restaurant might find that its crucial contracts are not fully implemented, its documents are overlooking minutes or approval resolutions authorizing crucial activities, or the company’s assets are encumbered by liens that have yet to be removed.
In the case above, the restaurant with the aid of its own legal advisors, can fix these issues before a buyer conducts its due diligence and uses these deficiencies as a foundation to dismiss the value of the restaurant. Lastly, the information collected during due diligence can help legal advisers in negotiating and drafting transaction records and the business in preparing its own disclosure schedules. Dependent on the liabilities and potential liabilities identified through the due diligence process, legal advisors can draft representations and warranties, covenants and indemnification provisions from the trade records, and disclosures to allocate risk at the seller’s discretion.
Restaurant for Sale LA has helped broker hundreds of transactions. It’s important to note that in our experience, most deal breakers occur during due diligence. We don’t suggest doing it alone…
It’s important to note that in our experience, most deal breakers occur during due diligence. Acting as your intermediary, we help you avoid setbacks thus ensuring your sale maintains momentum and closes. Our goal is to help you avoid problems, anticipate buyer requests, and eliminate surprises.
To ensure a smooth transaction, we assist you in using methods we have employed to help sell hundreds of companies.
- A strict timetable to ensure confidentiality.
- A due diligence checklist and contingency sign-off.
- Due diligence materials and book.
Due Diligence is unique to every restaurant. To acquire a personalized proposal please get in touch with us today.
