What Is Diligence?

Everyone in a sale does their own diligence. The buyer confirms the Seller’s claims about the business, and the Seller confirms that the buyer can be trusted with it. Both sides learn what they are agreeing to, and neither meets surprises after closing. It starts after both sides agree on the main terms in a letter of intent, and ends at closing.

What the buyer checks

The numbers. Several years of financial statements and tax returns, and how they agree with each other.
The value. What the business is worth, set by an independent appraisal.
Customers. Who the main customers are, and any written contracts or service agreements with them.
People. Staff roles, pay, and who holds the licenses the business works under.
Equipment and vehicles. What the business owns, its condition, and any loans secured on it.
Contracts and leases. Suppliers, leases and software, and whether each can be transferred to a new owner.
Debts and liens. Public records searches show any claims against the business's assets, so they can be paid off at closing.
Licenses, permits and insurance. What the trade requires, and what a new owner must apply for. See our licensing guide.

What you check about the buyer

Who will run your business. Their experience, their references and their character. Meet them more than once, and ask how they lead people.
Their plans. What they intend for your name, your team and your customers, and whether they will put it in writing.
Whether they can follow through. What they have done before, and whether they can do what they promise.
Their advisers. Who represents them, so you know who your own attorney and CPA will be working across from.

Why it takes time

Some steps wait on other people: a landlord agreeing to a new tenant, a customer agreeing to transfer a contract, a licensing board reviewing an application. Records that are spread across folders and email take longer to gather. How long it takes depends mostly on the business and on how ready its records are.

How to prepare

Gather three years of financial statements and tax returns.
List your customer contracts, leases, loans and software subscriptions.
List every license and permit, and who holds each one.
Write down anything a buyer should know, even if nobody has asked yet.
Ask your CPA to check that your books and tax returns agree.
Write down your questions for the buyer, and the answers you need before you agree.

How Ojenta does it

Plain, upfront disclosure. Much like a home seller's disclosure, you tell us what a buyer should know, instead of waiting for the right question. That keeps surprises, and disputes, out of the years after closing.
Everyone does their own diligence. You, the Protege and Ojenta each check what matters, with your own attorney and CPA. Nobody relies on another party’s checking. We answer your questions about Ojenta, the Protege and the Mentor openly, and you meet them before you agree.
An independent background check on the Protege. An independent third party checks the Protege’s background, and the report is shared with you and every other party. It adds to your own checking; it doesn’t replace it.
An independent appraisal sets the price. Neither side sets the value alone. An independent appraiser values the business, and the deal closes on that value.
Work runs in parallel. Contract transfers and license applications start when the letter of intent is signed, alongside diligence, not after it.
Private throughout. Diligence happens under a confidentiality agreement. Your employees and customers don't hear about it from us.

In short

Everyone does their own diligence: the buyer confirms the business, and you confirm the people who will run it. Organized records, an upfront disclosure and your own questions make it faster and smoother for everyone.

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