What is a Due Diligence Investigation?
If you are buying a business, it is crucial that you do your homework about that business before investing all your time, energy and money into the task. Gather information about the company by doing what is called conducting due diligence.
Due diligence differs from other more intrusive background checks in that these reports are always gathered from publicly available information. When you hire a service to conduct due diligence on a company, ask if it can send you an annual report so you can keep track of the company's status.
Conducting proper due diligence will help the buyer avoid the following problems,
according to AllBusiness.com:
According to AllBusiness.com, the following is a list of some of the main documents you should expect to receive in the course of your due diligence:
Key contracts Financial statements Customer lists Employment agreements Minutes and consents of the board of directors and shareholders Confidentiality and Invention Assignment Agreements with employees Corporate charter and bylaws Litigation-related documents Patents, copyrights, and other intellectual property-related documents Licenses and permits related to operation of the business
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