Formerly Carolina Business Associates
Bridge to Your Legacy
The CBA Group Current News Home / Current News
The Selling Process (Part II): Due Diligence
Jun 2014

The Selling Process (Part II): Due Diligence

By webmaster

You’ve Gotten an Offer on Your Business, now what?

 The Negotiation

 Now is the time the Buyer and Seller hash out what they want. The Broker’s purpose in this process is to convey information between the parties and to advise each party in trying to get what they want. There is one thing Carolina Business Associates does not do in the entire process : We do not tell Seller’s how much a Buyer is willing to spend and we do not tell Buyer’s what a Seller will accept. Other than this rule we will advise our Clients and try to find a deal where both can be happy. In the event of a stalemate in the negotiations the Broker should be able to help facilitate the negotiation to resolve the stalemate. While the Broker markets the Business and fields Inquiries the negotiation is where the real work begins, putting a deal together everyone can agree on.

Signed Offer

 Once everything has been agreed by the Buyer and Seller, the Due Diligence period begins and the Business is “Under Contract”. At this point all prospective Buyers are informed the Business is Under Contract and that we cannot continue disclosing information unless the “under contract” deal falls through. Many Buyers are okay with this and will typically wait to hear back about the closing before we point them at other Business Opportunities they find interesting. In the event a deal falls through we may have one or two more Buyers eagerly awaiting the Opportunity.

Due Diligence

Due Diligence is a detailed but usually pretty quick period of time where the Buyer gets to know EVERYTHING about the Business. Tax returns, lease negotiations, software, client lists, payroll, employee information, etc. At this point there is nothing a Buyer does not have access to. If a Seller is providing financing they can also request a Financial Statement from the Buyer. Although I am writing this under the Due Diligence heading, a Financial Statement for Seller Financing can take place prior to a signed offer since the Seller is acting as a Bank.

Other factors to consider during Due Diligence are any contingencies in the contract. For instance, a lease agreement between Buyer and Landlord, a financing contingency, management contingencies, etc. may need to be addressed prior to Closing.

Once Due Diligence is complete and a Buyer has not discovered something about the Business contrary to the information they already had, the transaction proceeds to closing.


Finally the day of closing! Today you, the Seller, get paid and walk away from the Business. Closings are usually relatively brief and are conducted by an Attorney. We recommend using a Transaction Attorney with Business experience who represents the deal itself rather than the Seller or Buyer. This allows the attorney to counsel both sides and allows the Buyer and Seller both to be comfortable. A typical closing is simply the signing of checks and of all the paperwork needed to formally sell the Business. Closings usually are short and mostly just a formality.

After the Closing everyone should be pleased. The Buyer is now the Owner of their own Business and the Seller has received the financial reward from his years of labor.

Congratulations! You’ve done it!

Businesses for sale

© 2018 The CBA Group, All rights reserved.