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26 May “That Question Can Wait Until Due Diligence”

Business buyers are often more sophisticated. That’s one of the biggest reason business sellers need expert representation in mergers and acquisitions.  In their “sophistication,” they can often be very hasty in asking for information that’s much more suited for due diligence. It’s not that we (either the seller or the seller’s agent) are trying to be cagey or withhold information, but we’re simply doing one thing: we’re trying our best to avoid spending too much time on too many rat holes.

Think for a minute what it would mean to get into due diligence too early. Because our M&A process involves bringing multiple buyers to the table, we’ll often be working with more than a dozen firms at a time. Think about what this might mean for the seller and the seller’s agent in terms of total time commitment to just answering questions. It would cause an overwhelming deluge, akin to offering due diligence information to over 10 firms at once. And, since each firm might want detail the others don’t, I’m going to be spending a great deal of time chasing small questions and missing the big picture.

The moral of this story: save due diligence for when due diligence is traditionally needed.

While we’re advocates of quick due diligence, I would also rather spend more time answering the minutiae for just one firm, rather than the other competing for the deal. Now I’ve learned to say, “that question can wait until due diligence…”

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Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.