Summary

In this episode of the Steps to Soul podcast, Brandon Bourgeois and Chris Sater delve into the critical process of due diligence in buying and selling businesses. They discuss the importance of thorough preparation, the roles of external advisors, and the necessity of building trust between buyers and sellers. The conversation covers various phases of due diligence, including document review, operational assessments, and market analysis, while highlighting common pitfalls and the significance of transparency. The hosts emphasize the value of a Quality of Earnings analysis and the essential role brokers play in facilitating smooth transactions. Listeners are encouraged to approach due diligence as a vital step towards successful business transactions.

Takeaways

• Due diligence is essential for building trust in transactions.
• Both buyers and sellers must prepare thoroughly for due diligence.
• External advisors like CPAs and attorneys are crucial in the process.
• Transparency in financials can prevent misunderstandings later on.
• A Quality of Earnings analysis can protect buyers and clarify business value.
• Disorganized financials can stall or kill deals.
• Understanding market conditions is vital for buyers.
• Sellers should be upfront about any issues to maintain credibility.
• Operational reviews help assess the strength of a business.
• Preparation for due diligence can significantly enhance buyer confidence.

Titles

• Mastering Due Diligence in Business Transactions
• The Essential Guide to Due Diligence
• Building Trust Through Due Diligence

Sound Bites

• "Time kills deals."
• "Be upfront with everything."
• "External threats can kill deals."
• "A Q of E can protect you as a buyer."
• "Don't be afraid of due diligence."
• "Preparation equals confidence."

Chapters

00:00 Introduction to Due Diligence

01:28 Understanding Due Diligence

03:20 The Role of External Advisors

04:40 Building Trust in Transactions

06:12 Phases of Due Diligence

10:01 Operational Review and Employee Involvement

11:04 Market Review and External Factors

14:20 Common Issues in Due Diligence

16:35 Quality of Earnings Analysis

19:26 Preparing for Due Diligence

25:36 The Broker's Role in Due Diligence

29:19 Final Thoughts on Due Diligence

Keywords

due diligence, business transactions, buying a business, selling a business, financial preparation, operational review, market analysis, quality of earnings, trust in transactions, business brokers