Will Form 8865 Acquisitions 2023-2024

Hi there, it's Brett Sanctus, the right-brain business attorney. Today, we're talking about due diligence. This is a topic that comes up in various contexts in the law. Lenders conduct due diligence before granting loans, and venture capital investors also due diligence on companies. However, today, I'm specifically discussing due diligence in the mergers and acquisitions context. If you're selling your business, you need to familiarize yourself with this concept. Right now, I'm looking at a due diligence checklist. This is a list of things that a buyer would like to see, which they will send to the seller of the business once there's a letter of intent or some indication of interest. The checklist is organized by topics and covers areas such as finance, legal, operational, strategic, and human resources - essentially, the main functions of the business. The buyer requests specific documents relevant to each topic. Due diligence is the process of thoroughly analyzing and verifying what you're purchasing, making sure it aligns with your expectations. This process can be quite strenuous for sellers, similar to a root canal for the business. Sellers are required to gather and produce numerous documents, and there are multiple rounds of follow-up questions, especially in larger deals involving big deal teams. Typically, all the due diligence items and responses are organized into folders. There are off-the-shelf products like intra links and ideals designed for this purpose, but as a seller, you will receive a request from the buyer asking for various documents. The buyer will ask for an organizational chart, financials for the past three years including profit and loss statements, income statements, and cash flow statements. They will also request tax returns, customer lists, contracts, and almost everything related to the business. The depth of the process depends on the size of the business...