Coming down off the peak of high valuations and easily available money has brought some changes within the deal making space. One of those changes is the completion of the preliminary due diligence process before executing an LOI. Traditionally in the past, buyers would bring in the due diligence team after agreeing to the terms and conditions. One of which is almost always a lockdown period in which the buyer gets exclusive rights to proceed without interference from other buyers. As all business brokers and advisors know, issues do arise during due diligence that needs to be resolved causing delay and eating into the exclusivity period. In addition, the buyer is incurring expenses for his/her team as well as the cost of time lost.
Today more business sellers and their advisors are putting together high-level due diligence that meets the preliminary needs of buyers, most commonly accounting and financial analysis. However, this may include physical inspection of manufacturing equipment or interviews with management. Sellers working under the guidance of advisors should put forth preliminary information that is more complex or problematic in nature. Doing so helps buyers get more comfortable with the deal in which they can also start parallel processes such as discussions with lenders earlier.
With a wide variety of business verticals (except collections & bankruptcy) have taken their lumps over the past few years. Enabling qualified buyers to view more of the inner workings of the target company earlier in the process will allow for a more efficient transaction saving buyers and sellers time and money.