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Maintaining Company Valuation Through Due Diligence

Dress rehearsal for the big game can be the difference between disappointment and euphoria

Many business owners don't realize that getting potential acquirers to one day consider buying their business is in many ways the easy part. The difficult part is maintaining potential acquirer excitement to do the deal even after they get a close look inside your company tent. A little known fact is that a large number of companies that try to sell actually aren't able to get their exit transaction over the finish line. And my experience on being on the acquiring side of the equation many times is that this is because the seller isn't prepared to maintain acquirer excitement through the due diligence process.

When the acquirer first shows up in your lobby to consider buying your business, they may have some excitement building up at the prospect of taking over what you've built. But as the owner and/or CEO, it's your job to ensure that the excitement holds up even after they do their due diligence, or what I fondly refer to as the proctology exam. What few business owners realize is that exit transactions often go south because their team and their business in general isn't prepared in advance to support the due diligence requirements of the acquirer. The acquirer looks for information that either isn't available but essential to having in their eyes or the due diligence has the acquirer probing areas you as the seller just weren't ready to impress them with. All of this can lead to either a reduction in their initial offer price range or cause them to back out of the transaction entirely.

What I learned with my businesses is the power of conducting a Due Diligence Readiness Assessment (DDRA) long before you consider selling your company. This is the dress rehearsal of your business to withstand a typical due diligence probing that an acquirer will put your company through. Doing a DDRA a minimum of two or more years before you consider going to market gives you enough time to address where your company/team will have shortcomings in maintaining acquirer excitement and allow you time to improve/address them. Have your attorney or ask an advisor to share with you a sample due diligence check list from the typical acquirer and review it for how your business would hold up if you had to undergo the process today. You will most certainly see areas where you will question your readiness to withstand the proctology exam and will be giving yourself time to address it. 

Don't wait until it's game time to find out your company can't maintain acquirer excitement through due diligence. Going this route could deliver a very disappointing outcome for you. Your goal is to be euphoric at time of selling your business. Do a dress rehearsal early on to ensure you're supporting your path to euphoria!

Use Greenpoint Testing to Achieve Your Desired Exit Valuation

It only takes 106 questions, scanning 10 essential business functions, to stress test your readiness for a successful exit.

However, these questions require thoughtful commitment to achieve your desired exit valuation.

During this up to hour-long online testing, you'll see questions such as the following.

Sample Question 02

After internalizing each question, select among three answer options – Agree, Unsure and Don’t Agree – choosing the answer which best describes you and your business.

Then, complete the Greenpoint questionnaire to unlock your personalized report, which will reveal any gaps in your planning, pointing to the action steps needed to maximize your desired exit valuation.

Format: Digital

Delivery method: Email

Report included: Your Greenpoint results