Business Acquisition Due Diligence: What Is And What To Expect | Jonathan Jay | 2024

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In this video, business acquisition strategy expert Jonathan Jay explains what due diligence is when buying a business and what to expect during the process. As both a business seller and buyer, he has seen the process from both sides and offers valuable insights.
Due diligence is carried out before you buy an existing business. It is the process of thoroughly researching and verifying the information provided by the seller about the business being sold. Jonathan explains that there are three types of due diligence: financial, legal, and commercial.
Financial due diligence is where you make sure the numbers stack up. Owners can sometimes be poor at record-keeping, so it's important to check the financial information provided by the seller. Jonathan suggests asking the owner of the business for the full accounts to get a more complete picture.
You should also get the management accounts, bank statements, VAT returns, and Corporation Tax return to build up a financial picture of the business.
Legal due diligence is typically undertaken by the law firm drafting the sale and purchase agreement. It covers copyrights and patents, lawsuits, and investigates any legal processes that are underway. Your lawyer aims to make sure you are protected, and if due diligence shows something isn't as good as you thought, you can restructure the deal to mitigate your risk.
Commercial due diligence is undertaken by the business buyer or a professional firm. It confirms that products and services are fit for purpose and there are no complaints. Checking reviews of the business can also help you get an understanding of the business and confirm the goodwill exists.
If you're looking to buy an established business, this video is a must-watch. Jonathan Jay's insights and advice can help you make informed decisions and avoid costly mistakes. Whether you're a first-time buyer or a seasoned investor, understanding due diligence is critical to making successful business acquisitions.

[@theDealmakers]

If you enjoyed this video and would like to take the next step to learn the best ways of buying a business, without risking your own cash, you can access my free training at bit.ly/44EVInM Thank you!

[@NebBursac-qk3ce]

I just came across you/your channel, very good and succinct content on a few videos i had seen. Keep it up JJ.

[@siyz250]

Jees Jonathan. I feel guilty that l have learned sooooooo much about busines from you. Firstly, thank you. I recently listened to a fantastic audio book called "The Great Game Of Business" (fantastic story of how staff bought out "International Harvester" (yes the famous International machinery brand) and flipped the business operating model upside down. So many parallels to you and what you do with your KZbin channel. I have learned from this book to not be scared to show your operating system and get buy in from staff/audience. How/when do New Zealanders get to meet you & put some money back in. Si.

[@densfloar]

Thank you for this content Jonathan!

[@theDealmakers]

Thanks Dominik

[@funkyboxtv9542]

A great video Jon really understood what you was saying great information

[@theDealmakers]

thanks !

[@Bari_Khan_CEng_CMarEng]

Great video!

[@kellyjackson30]

Thank you for this.very informative 👍

[@theDealmakers]

Glad it was helpful!

[@omeramian3773]

Great video

[@theDealmakers]

Thanks!

[@michigandersea3485]

Smart guy. Totally right about how very small business does management based on cash flow, lol.

[@steveharman8907]

Nice tough stuff for breakfast.!

[@jayveemoritz]

Question so when buying a small business, should i build my team first and do the due diligence, or should i go to a bank first and see if i qualify for an sba loan? for exampleI found some business online in the state i live in where the owner is trying to retire so his selling his business. Business was established since 1997, it's gross rev is 2x it's cash flow, and asking price is about 1.8x. 🤔. Sorry for the dumb question, but im completely new. Currently teaching myself on what to look at when browsing through multiple small business for sell. Wondering whats my next step once i find 1 that i really like.

[@ButBigger42]

See, no one talks about the actual important stuff like this. How to find your team. When to find your team. Etc.

[@TheRhehan]

did you find an answer to your question? I have the same exact question as yours and am curious on the answer