Under LOI
December 28, 2023
by a searcher from The University of Arizona - Eller College of Management in Gilbert, AZ, USA
Finally after about 8 months of searching I’m under LOI! The target is a final mile produce distribution company, focused mainly on restaurants and small grocery (think bodegas). This target has some strong affinities to my career background, even my prior business that I owned which was a food service and Vending company.
Im curious how others have dealt with the outlay of the DD process. I have my deal team in place, but how did you sequence you legal and financial DD? I really don’t want to outlay about 30k on a deal that could go sideways early on, and interested in the community’s thoughts and experiences.
thanks
from The University of Texas at Austin in Austin, TX, USA
1. Financial due diligence: only pay part of the total now & gave a fixed price, not an hourly rate
2. If the deal goes bust early on, remaining funds are applied toward future deals. We offer that for clients.
3. Legal: ask for a similar payment structure as the above.
4. Have a comprehensive due diligence list that includes financial, legal, operations, marketing, sales, customer, supplier, tech, etc.. While financial due diligence is underway, meet with the seller weekly and make sure you're getting answers to all the other areas.
5. This will also help you get to know them. What their typical week is like, how involved they are in business and much more.
6. You can find out a lot about the seller & the business.m that may make you walk away early on by being really proactive about the various areas of due diligence.
from The University of Arizona in Gilbert, AZ, USA