Fall 2015 Issue of Horizons

Sell-Side Due Diligence Sell-side due diligence requires owners and management to view their company through an honest, objective lens. By commissioning third-party experts during the early stages of the sale process, the seller receives valuable guidance and practice answering difficult questions prior to the buy- side investigation. The use of third parties to perform the sell- side due diligence enhances the credibility of the information presented by the selling company. Because sell-side due diligence is completed prior to any negotiations, it can decrease the amount of buy-side due diligence procedures that need to be performed, shortening the due diligence process and improving the speed to close. Sell-side due diligence also mitigates the risk of uncovering “surprises” during buy-side due diligence. If issues are uncovered prior to the company being marketed, corrective actions can be taken and cited in discussions with buyers.

In turn, this ensures that the selling company’s price captures its maximum value by reducing the amount of wiggle room the buyer has to renegotiate the purchase price. Conclusion As a seller, you are best served by having an open and honest conversation with prospective buyers about your business’ issues and potential solutions. If a buyer finds these issues during due diligence, you risk the deal falling apart or losing significant value in the transaction. Performing sell-side due diligence can help prepare you for the scrutiny of buy-side due diligence. In addition, it will help you build trust with potential buyers early on as all of your business’ issues are front and center from the get-go, which can help prevent retrading and maximize the value you capture from the sale.

RubinBrown’s Private Equity Services Group RubinBrown offers private equity firms and their portfolio companies an integrated suite of business services aligned across the entire private equity life cycle.

Ben Barnes, CPA, CGMA Partner-In-Charge Private Equity Services Group 314.678.3531 ben.barnes@rubinbrown.com

Tim Farquhar, CFA, CPA Partner Private Equity Services Group 314.290.3281 tim.farquhar@rubinbrown.com

Jeff Sackman, CPA, CGMA Partner & Vice Chair Private Equity Services Group 314.290.3406 jeff.sackman@rubinbrown.com

David Schomer, CPA Consultant Private Equity Services Group 314.290.3269 david.schomer@rubinbrown.com

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