PoDBN Member Tip 37
DUE DILIGENCE – GETTING WHAT YOU PAID FOR
Imagine buying a second-hand car without taking it for a test drive or getting a mechanical check. Or a house without a builder’s inspection. Or hiring an employee without an interview and reference check. When considering transactions such as these, it’s essential to get as much information as possible to ensure you make a sensible decision and minimise risk.
The same rules apply when buying a company or business. The object of due diligence is to ensure that the buyer of an undertaking - be it company shares, business, or land – has the same quality and quantity of information as the seller. Due diligence highlights potential problems in a business which can detract from the value the buyer is investing; it can also highlight areas where improvement is required, allowing the buyer to implement changes quickly and “hit the ground running”.
Jeremy Patston
Nick Hodson Lawyers
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