I have many clients who call me at the 11th hour to request a contract and tell me not to worry about any due diligence that may get in the way of their sweet deal. That is a sour response.
Due diligence may seem trite and monotonous but it is essential to making sure you receive what you expect. Do the financial statements justify that purchase price? I recently reviewed a survey on a real estate transaction with a seller who owns real estate all across the southeast. The survey clearly showed that the seller built storm water and sewer lines that traversed the adjacent property and there was no easement for those lines. If my client purchases the property without the easement he takes the risk that the adjacent landowner may demand that my client remove the pipes or pay an exhorbitant price for an easement. How would you feel spending 5,000,000 to close this transaction and then find out about this problem. A mere hour spent reviewing a survey identified this problem.
Whether you are hiring a CEO, inking a new strategic partnership or purchasing a business, there is no substitute for good old fashion due diligence. In my experience those who really pay attention to the small details become successful businesses. Those who don’t usually call my office after the fact upset at others when they simply need to look in the mirror for the culprit of their misfortune.
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