PRELIMINARY DUE DILIGENCE
Everyone wastes more time on this step than any other. This is where you find out how serious the seller is and to what extent they have prepared the company for sale.
Most sellers and brokers are ethical and will disclose everything they know. Surprises (we uncover them all the time) are usually not the product of a conspiracy to defraud the buyer but are usually a result of lax or incomplete record-keeping.
Representatives of the seller do their client a great disservice suggesting that the answers to your questions will come out in the formal due diligence process. Translation: the company has not been made administratively ready for sale and the seller/broker wants you to foot the bill to get the answers they should already have.
Most of the unknowns about a business must be learned before the formal due diligence process. At Blackburn & Fears Inc our business due diligence services get as much information up front, before legal and accounting services are required. The more you know early in the process the quicker you will know if you should move forward with the purchase; the better the offer; and the less you will spend on formal due diligence.