What to expect during the due diligence phase

Inaccurate information that comes up during the due diligence phase is the number 1 reason that deals fall apart. Fortunately, this is a problem that can easily be avoided by double checking the company's financial statements before sending the prospectus to buyers. As experienced website brokers, we always explain to clients that nothing is more important than ensuring the financials we present to prospective buyers must line up exactly with the bank statements, merchant account statements and tax returns that will be provided to the buyer during the due diligence phase of the transaction. Immediately after a business comes under agreement, the website business brokers will coordinate the exchange of due diligence documentation between the buyer and the seller. The first thing the buyer will do as the due diligence phase begins is attempt to verify the financial statements in the prospectus by matching revenues and expenses with the company bank statements, merchant account statements and company tax returns. While this may sound simple enough, there will always be sellers that don't fully verify the accuracy of their P&L statements and this gives the buyer a legitimate reason to walk away from the deal if they find substantial inaccuracies in the financials presented when compared to the source documentation. While verifying the financials presented with the source documentation, website brokers also help coordinate other aspects of the due diligence phase which include speaking with suppliers, understanding the breakdown of revenues, and meeting with the seller to get a first-hand look at the website's daily operations.

While there are many important parts of the due diligence phase of the transaction, verifying the financial statements is by far the most important piece of the process to sell a website, especially since most buyers primarily base their offer of the website's financial performance. Ultimately, the company's financial performance will dictate the buyer's return on investment, which is why buyers place so much emphasis on verifying the financials presented with source documentation. There will always be risk for the seller when entering a due diligence phase, but as website business brokers, we help mitigate that risk substantially by explaining the importance of financial statement accuracy when working with the seller to prepare the company prospectus. When the financial statements are accurate, there will always be a much higher probability that the deal gets closed on time and at the original price agreed upon during the offer stage of the transaction. Towards the end of the due diligence phase, website brokers also help coordinate drafting the asset purchase agreement, which is the final agreement that needs to be signed by both parties to finalize the transaction. It's not always easy to sell an internet business, but the website brokers at iAcquisitions have nearly a decade of experience advising on these types of transactions and can help guide you every step of the way.