Due Diligence

After a letter of intent is agreed to, we enter the due diligence phase of the transaction.  In this phase the acquirer has the opportunity to perform a detailed inspection of the business.  Depending upon the size or complexity of the transaction, the acquirer may opt to engage a public accounting firm to conduct an audit of the business.  During the due diligence phase, the acquirer may review the following areas:

1.      1.   Financials

a.       Cash Flow

b.      Days Sales Outstanding

c.       Tax Returns

d.      Obsolete Inventory

e.       Accounts Payable

f.       Long Term Payables

g.      Long Term Liabilities

h.      Asset Value

i.        Accounting Procedures and Policies

j.        Facility Ownership and Leases

2.      2.   Potential Liabilities

a.       Warranty Issues

b.      Environmental Issue

c.       Patent Infringement

d.      Liens/Lawsuits

e.       Pending Regulatory

f.       Human resources

3.      3.  Technology

a.       Age

b.      Capacity

c.       Business Suitability

d.      Future Investment

The acquirer may also explore other areas of interest in the company to insure to their satisfaction that the company is being properly and factually represented.  Waterford Management operates as facilitator during this phase.