So selling a company, need help (1 Viewer)

[IC FBGCav]

I am not personally selling it but I am the one dealing with it on the sellers end.  I made the potential buyer sign a nda and they keep asking for more and more information, which is okay but a ton of work.  My fear is if they are legit or not.  They seem to be but many look the part.  What would be legitimate for me to ask the potential buyer to provide to know we are not just wasting resources and time?

TIA

 

[msommer]

I am not personally selling it but I am the one dealing with it on the sellers end.  I made the potential buyer sign a nda and they keep asking for more and more information, which is okay but a ton of work.  My fear is if they are legit or not.  They seem to be but many look the part.  What would be legitimate for me to ask the potential buyer to provide to know we are not just wasting resources and time?

TIA

It's called due diligence. You are just going to have to grin and bear it

 

[IC FBGCav]

It's called due diligence. You are just going to have to grin and bear it

That just might be the case, why I am asking.  Ty.

 

[comfortably numb]

I am not personally selling it but I am the one dealing with it on the sellers end.  I made the potential buyer sign a nda and they keep asking for more and more information, which is okay but a ton of work.  My fear is if they are legit or not.  They seem to be but many look the part.  What would be legitimate for me to ask the potential buyer to provide to know we are not just wasting resources and time?

TIA

The Otis FFA deal goin down??

 

[IC FBGCav]

The Otis FFA deal goin down??

Who is Otis?

 

[BoltBacker]

Who is Otis?

Optical Transpose Interconnection System

 

[Arizona Ron]

As someone that's done several M&A over the years, I can tell you it is grueling for a seller and buyer.  If, however, you don't provide the documents/data ask it will increase your company's evaluated risk, lower the evaluated price and may even kill the deal. 

To your point regarding is this a waste of time, it's time consuming on both sides.  A company doesn't go through the due diligence (DD) process just for fun, they want to buy.  The DD process has to satisfy all stakeholders (bank, investors, owners, business managers, etc.). 

The broker should have set up some kind of data center/online repository to drop files - keeps an identical file repository on your company's drive (this is just in case this deal doesn't go through, you have it all in one place for the next potential buyer).

If your NDA is solid, be transparent; it will facilitate the deal going through faster. 

 

[Redwes25]

How do they intend to pay? You can put your own diligence request in on that front so you can see if they have funds or financing lined up.

 

[Ned]

How do they intend to pay? You can put your own diligence request in on that front so you can see if they have funds or financing lined up.

With coupons.

 

[Johnny Rock]

It’s not a great resource but maybe check with Dun & Bradstreet? Maybe ask for last two years tax returns? Research his/her company? Conversation to vett the buyer? Resume?

I see what you’re saying. If it’s just some dude off the street inquiring you want to know he’s legit.

 

[Exit 1]

How do they intend to pay? You can put your own diligence request in on that front so you can see if they have funds or financing lined up.

Wheat pennies or cryptocurrency is what I read.

 

[RUSF18]

(this is just in case this deal doesn't go through, you have it all in one place for the next potential buyer).

Bingo. Think of it this way...if a guy who proves to not be legit is asking for this stuff, the next legit buyer will likely be asking for all of this and potentially more. 

 

[Redwes25]

Wheat pennies or cryptocurrency is what I read.

Would take wheat back pennies.  Rumor is someone is trying to corner the market on those.  

 

[El Floppo]

I see wheat pennies have been covered.

Next step is to have them show you their rooster.

 

[CletiusMaximus]

I am not personally selling it but I am the one dealing with it on the sellers end.  I made the potential buyer sign a nda and they keep asking for more and more information, which is okay but a ton of work.  My fear is if they are legit or not.  They seem to be but many look the part.  What would be legitimate for me to ask the potential buyer to provide to know we are not just wasting resources and time?

TIA

Gets some reps. Lots of reps.  And warranties.  Also, make sure they hold you harmless.

 

[Chaka]

It's called due diligence. You are just going to have to grin and bear it

Yup. They may not be serious but they can't know one way or the other until they check you out (yes, you personally. In those skinny jeans you always wear on Friday).

 

[Aerial Assault]

If the company has a message board, be sure to get that cleared up first. 

 

[Chemical X]

10-25% in earnest money before sue siligence

25-40% upon completion of sue diligence, which has a defined period of time.  can't perform DD for 12 mos.

balance at closing. 

how are they paying?  if financing, get copy of commitment letter. if cash, get copy of bank statement showing proof of funds.

 

[Arizona Ron]

Also, I'm assuming you're using a broker right?  You're not just winging this, are you?

 

[Exit 1]

Kinkabe agrees in principle to the terms of the sale, and valuates your company at 725 million dollars. This is their last and final offer. I'll be outside. 

CEO Ted Norton looks at Flemming, intense.

FLEMMING STEEL III It's a fair deal. I don't think we'll get much more out of them...

The other execs all nod.

Then Mitch BURRRRPS: MITCH #### that, dude, you can do better.

MITCH Look, this is just like when you're trying to #### a Jewish girl and she keeps saying "no, no, I don't want to, I'm really drunk and you're not circumcised" but then she keeps making out with you and not getting out of your Fiero so you know she really does want it, she just needs to be nudged a bit more so she can rationalize it to herself and to her God, know what I mean? This is just like that. Everyone in the room is speechless. Mitch opens another soda.

 

[IC FBGCav]

As someone that's done several M&A over the years, I can tell you it is grueling for a seller and buyer.  If, however, you don't provide the documents/data ask it will increase your company's evaluated risk, lower the evaluated price and may even kill the deal. 

To your point regarding is this a waste of time, it's time consuming on both sides.  A company doesn't go through the due diligence (DD) process just for fun, they want to buy.  The DD process has to satisfy all stakeholders (bank, investors, owners, business managers, etc.). 

The broker should have set up some kind of data center/online repository to drop files - keeps an identical file repository on your company's drive (this is just in case this deal doesn't go through, you have it all in one place for the next potential buyer).

If your NDA is solid, be transparent; it will facilitate the deal going through faster. 

I get all you are saying.  The guy I work for owns a few companies.  One is my baby, that I know everything about and everything recorded passes through me.  

This is not that one.  This one I can't confirm all the transactions.  For this company, my role is pretty much like a CPA, you gave me the numbers and I did the tax return.   I have seen flaws that didn't matter to the IRS but might matter to a buyer.  

So I can audit this place and make sure the COGS expense are in the right place but it would require pulling the source documents.  

Just don't have time for it.  

Now all the expenses are COGS, I would just making sure 5% of the 95% are in the right place.  I know 95% is correct.  But I know about 5% might be done wrong.  

The difference would be they sold 1000 dollars of drinks and 2000 in candy.  The real number might be 777 of drinks and 2333 of candy.  

 

[IC FBGCav]

10-25% in earnest money before sue siligence

25-40% upon completion of sue diligence, which has a defined period of time.  can't perform DD for 12 mos.

balance at closing. 

how are they paying?  if financing, get copy of commitment letter. if cash, get copy of bank statement showing proof of funds.

It's the other place I work.  The guy is local.  You would hate him.