Due Diligence is the phase in Mergers & Acquisitions that refers to the investigation of a company by a seller after the Letter of Intent is issued. It needs to be completed before the actual sale of the company is completed and the Sale Agreement is signed. The trend is that the time for Due Diligence by a buyer is getting shorter and shorter. In the old days, the due diligence phase could last up to 90 days, sometimes more. Now it usually is under 60 days. Sometimes even shorter. What causes the most time in due diligence? What is…
Author: Gregory Pearl
Why the Rich Keep Getting Richer
Have you ever noticed how an ordinary person or company has one “lucky” random opportunity and then becomes increasingly successful over time, starting with that one opportunity? The success continues for the lucky one as their former peers continue to plod along without much to show. No one could have forecasted the lucky success at the beginning. The recipient of that lucky break is often mediocre. That mediocrity may never disappear but the success continues. As things compound to the extreme, great wealth and prestige may accumulate as a result. What is happening is that the first random success compounds…
How Are Small Businesses Financed?
It is hard to categorize Small Business as to being one type or another. Small businesses and their owners are a very diverse group. For example, this is true for the number of employees in a business. Number of employees is an indicator of size. Depending on how employees are counted and the definition of such, the number of employees can range from zero up to 499. The financing needs of a business can be vastly different based on size and other factors. These other factors can include the maturity of the business (startups, later stage), capital requirements (does the…
The Hows and Whys of Recasting Financial Statements
Businesses have certainly seen a variety of conditions in the last conditions, both up and down. Businesses track their performance using the standard financial statements such as balance sheets, profit and loss (income) statements, cash flow analysis and tax returns. Cash flow analysis is particularly important, understanding how the money is used in the business over time. These performance tracking statements and documentation should reflect the ups and downs of a business over time. Recasting or restating these financial statements are important in determining the value of a business prior to sale. Recasting means a deep analysis to make sure…
Where Have All The Startups Gone?
Small businesses and startups are traditionally the backbone and driver of the American economy. They are the primary creator of new jobs. They are the primary source of innovation. They are important. But the number of startups being created in the USA seems to be declining. In 1985, 13% of all companies in the USA were less than two years old. In 2014, they were only about 8%. The number of people working in companies less than two years old declined from 9% of the workforce to below 5%. This is happening in every industry, not just technology. It is…
Know These Six Biggie Mistakes When Selling Your Business
I write a lot about the issues that can arise when selling a business. You may get tired of reading about it … but the once in a lifetime sale of a privately held business is probably the most important transaction in a business owner’s life. So here is another post on the subject. Business owners often underestimate the effort needed for a good outcome in a transaction. They also over estimate the value and salability of their companies. Consider these items: Overestimating the value of the company. The listing price should be based on the fair market value of…
Myths About Selling A Business
The business owner will only sell their business once. It is the most important transaction of their lives. The process is complex with legal, tax, valuation and personal planning issues all co-mingled. If you are a business owner looking to sell a business soon, here are some of the ‘myths’ we often hear that, if believed, can result in a less than optimum outcome. First Myth: I know what my business is worth, better than anyone else. Some owners want to be reimbursed for “sweat equity”. Others think their business is worth what they need in retirement. Yet others use…






