Doing your own Due Diligence

When purchasing a business it is important to understand its value. The value of a business will ultimately determine whether to purchase it and if so, how much to pay. A number of factors need to be considered when determining the value of a business, including; its financial position, future forecasts, existing customer relationships, staff structure and relationships, why the current owner is selling, your future exit strategy, and the list goes on.

Ideally, advisors who specialise in completing due diligence and financial analysis should be used. However, if that isn’t possible or if a ‘starting point’ is required before a specialist team is brought in, here are four key areas to focus on:

• the reoccurring nature of revenue,
• the quality of earnings,
• what drives business growth, and
• the business’s cash flow. Understanding business revenue

For more information on ‘Doing your own Due Diligence’ go to our Latest News page or refer page 3 of the pdf version click here or contact us.