Permanent Podcast: Real Talk About Private Equity and Buying, Selling, and Operating Small Businesses

Navigating Due Diligence to a Deal (Do Diligence Confidently Ep. 2)

Sep 14, 2023

The podcast discusses the importance of due diligence in the investment process and the need for understanding the intricacies of a business. It emphasizes the significance of organization and preparation. Examples of deals falling apart due to discrepancies in information are shared, emphasizing the need for sellers to disclose information and choose advisors wisely. The significance of cleaning up and organizing a business before selling is explored to expedite the due diligence process. The importance of documenting internal operating policies and procedures when selling a business is discussed, emphasizing the value of organization, preparedness, and transparency. Closing the gap in understanding a business during the due diligence process is highlighted for a mutually beneficial transaction, with insights on the steps involved.

30:39

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Quick takeaways

Diligence is about more than finding problems and saying no - it should be approached with a long-term relationship in mind, addressing potential issues early on for growth and improvement.

Transparency, organization, and thorough communication build trust during the diligence process and help bridge the gap between buyers and sellers, leading to successful partnerships.

Deep dives

Understanding Diligence

Diligence is the process of comprehensively examining a business to learn about its key components, including its successes, risks, and opportunities for improvement. It also involves understanding the people behind the business and how to best serve them. However, diligence is often misconstrued as merely finding problems and saying no. The importance of diligence varies depending on who drives the process, but it is crucial to approach it with the long-term relationship in mind. By addressing potential issues early on and viewing them through a 20+ year lens, there is room for growth and improvement.

The Importance of Transparent Communication

00:23

Introduction

3min

Importance of Due Diligence in Deal Processes

10min

The Importance of Cleaning Up and Organizing Your Business Before Selling

3min

Importance of Documenting Internal Operating Policies

12min

Closing the Gap and Closing the Deal

2min

Due diligence done right is about building relationships while building the deal. In Episode 2 of Do Diligence Confidnetly: Navigating the Due Diligence Process to a Deal, Taylor Hall and Tim Hanson explain to David Cover and Sarah George-Waterfield the purpose of diligence, why Permanent Equity approaches it with a posture of being helpful, and why problems found in diligence don’t have to be deal killers.

THIS PODCAST IS ACCOMPANIED BY MORE DILIGENCE RESOURCES at:

https://www.permanentequity.com/diligence

CONNECT

Want to start a coversation with Permanent Equity? https://www.permanentequity.com/contact

Sign up for a new daily newsletter from Tim Hanson, Unqualified Opinions: https://www.permanentequity.com/unqualified-opinions

Follow founder & CEO Brent Beshore on X https://twitter.com/BrentBeshore

Visit https://www.permanentequity.com/for more

TIMESTAMPS

0:00 Intro & What Is Diligence?

4:29 Advice for Navigating the Due Diligence Process to a Deal

6:37 Help Your Buyer Confidenlty Take Risk

7:29 What Kinds of Problems Kill a Deal?

9:54 Why We Don’t Play the Gotcha Game

12:31 An Intervention for Taylor's Insanity

14:09 Get Things “Cleaned Up”

17:29 How to Build Trust With Your Buyer

21:23 What Happens When Issues Come Up In Diligence

23:36 Why Diligence Can Feel Overwhelming

26:31 What Would Cause a Deal to Die?

27:54 Our Approach to Diligence

30:03 What’s Next?

EPISODE CREDITS

Produced by David Cover

Music by Jees Guy

WE STEWARD COMPANIES THAT CARE WHAT HAPPENS NEXT

Visit https://www.permanentequity.com/ for more

Sign up for Unqualified Opinions, a new daily newsletter from our very own Tim Hanson: https://www.permanentequity.com/unqualified-opinions

Check out our other podcast episodes here: https://www.permanentequity.com/audio

LEGAL DISCLAIMER

This podcast is made available solely for educational purposes, and the information presented here does not constitute investment, legal, tax or other professional advice, and should not be construed as an offering of advisory services, or as a solicitation to buy, an offer to sell, or a recommendation of any securities or other financial instruments. The thoughts and opinions expressed by or through this podcast are those of the individual guests and speakers and do not necessarily reflect the views of Permanent Equity. The discussion on this podcast of any entity, product or service does not imply an endorsement thereof, and the guests may have a financial interest, whether through investment or otherwise, in one or more of any such entities, products or services. This podcast is presented by Permanent Equity and may not be copied, reproduced, republished or posted, in any form, without its express written consent.

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