Whenever your company is doing a deal involving buying a company or part of it, you need to know exactly what you are getting. The last thing that you want is to spend a large amount of money on a purchase, only to find out that you will not get the full benefit of the bargain because things with the company were not what you thought. Some of the nasty surprises that you could discover include:
- The sales and revenues are not what you thought
- The company owes more money than anticipated
- The business is facing lawsuits or has environmental liability
The way to avoid unwanted surprises is to undertake due diligence after you agree to the deal and before it closes. You would build in a certain time period for you to get a close look at the books and records of the target company to learn more about their business and possible liabilities. Before you begin due diligence, you would sign a confidentiality agreement.
Businesses should pay close attention to the due diligence process and not rush. If you do not discover something until after the sale, but you had access to the books, you may have to live with the consequences of it. Many companies end up with serious legal problems because they take on the liabilities of the company that they buy.
After you have completed due diligence, several things may happen:
- The deal will go through as the two parties previously agreed
- The purchase price will be adjusted based on what was discovered
- The deal could be canceled if issues cannot be resolved
Contact an Atlanta Business Transactions Attorney
Before you complete a transaction to buy another business, you need an attorney’s help to scrutinize that company and spot potential issues. Battleson Law helps parties to a merger throughout the process. Call us today at 470.398.0720 or contact us online to discuss your deal.