Managing Due Diligence Red Flags

As buy-side advisors we often help navigate our corporate clients through the due diligence process. This process typically uncovers issues that may impact the offer that our client had originally proposed in their letter of intent. Rarely have I experienced an issue that would be considered a “deal killer”, however, most material issues will require some delicate negotiations as they will impact the seller in a negative way. If you have a motivated buyer and seller, these issues are commonly addressed through a change in the price or terms of the acquisition or managed legally through the purchase agreement. Two of the most common issues that arise from due diligence include quality of earnings and environmental liabilities.

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