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)
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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.
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Demystifying Due Diligence
- Due diligence is a crucial part of any investment process, often shrouded in secrecy.
- This podcast aims to demystify the process at Permanent Equity.
The Purpose of Diligence
- Diligence helps understand a business's nuances, components, risks, and opportunities.
- It's a chance to learn about the people involved and how to best serve them.
Failed Deals
- Tim Hanson shares examples of deals that failed due to discrepancies between pre-diligence information and diligence findings.
- One example involved a business that claimed $4 million in cash flow but had a negative cash flow.