Are you considering buying a new business, farm or orchard? If so, how confident are you that the financial results you are expecting from the business or promised by the vendor are accurate and achievable? Will your goals and expectations for purchasing the business, farm or orchard be achieved? Buying a new business, farm or orchard usually means a large capital outlay. For most it is important that the risk of losing this capital is minimised and that you earn a good return from your capital and time invested into running the business.
Due diligence is the term used to describe the time you or your advisers spend on investigating a business, farm or orchard prior to committing to purchase that business, farm or orchard. This can be done before a formal offer is made or once the purchase price has been agreed on through a formal Sale and Purchase Agreement that includes a due diligence clause. The clause gives the purchaser period of time to carry out their investigation before committing unconditionally to go ahead with the purchase.
Through working alongside The Accounting Collective team we will develop a due diligence program that will:
- Assess the key business risks and the impact these may have on the financial results of the business, farm or orchard
- Forecast your likely financial results, forecasted position and working capital requirements
- Compare the forecasted results against the vendors warranties and known industry benchmarking data
- Compare the likely financial and time comittment outcomes against your personal goals and expectations for purchasing the business, farm or orchard
- Provide a written report to present to your financier for the purposes of raising finance to purchase the business, farm or orchard
- Ultimately conclude whether you should proceed with the purchase or not
Buying a new business, farm or orchard is a big financial risk. Make sure you minimise these risks and ensure that your goals and expectations are met by using the expertise of The Accounting Collective team to work alongside you during the due diligence process.