When a business owner decides to sell their business, the need to objectively assess the current condition of the company can often be overlooked. In failing to do this, the seller weakens their power of negotiation with potential acquirers. The best way to address this is through “reverse,” or “vendor,” due diligence.
Reverse due diligence is typically the last step performed before selling a business. However, it can also be conducted well in advance, to allow owners adequate time to correct or modify issues prior to exit. And if the end result is a higher business valuation or greater negotiating power, then it’s well worth the investment.