From the previous marketing phase, you should now have agreed the Heads of Terms with your preferred buyer and are ready to work through due diligence, working together to resolve and document any issues in the relevant legal documentation.

This means they are now ready to close the deal!

Step 1: Due Diligence

When the vendor agrees the buyer’s Heads of Terms, the process moves to due diligence, where the buyer conducts its own investigations of the business, also validating the information provided thus far. The vendor is expected to disclose all its contracts, financials, customer information, employee information, and much more to the buyer.

Typically, the due diligence information is uploaded to a secure, online data room, commonly known as a data room, where multiple persons are able to make access, make notes and then to ask vendor additional questions also known as Request for Information (RFI).

Advice: The M&A Advisor should support the vendor by ensuring the buyer is requesting valid documents.

Step 2: Legal

The legal stage is where the final nuisances of the Purchase Agreement are completed, matching all the previous steps to the due diligence documents, and capturing any remaining gaps.

Advice: The M&A Advisor should support the process by providing commercial insight to the business and strategic awareness to ensure the deal completion.

Step 3: Resolve Issues

Lots of deals can fail at this stage, which results in a large waste of time but if prepared correctly and perceived risks are properly explained away or mitigated, price chips or undesirable structures can be avoided.

Advice: The aim for the M&A Advisors on both sides is to work towards a non-zero-sum game as far as possible.