Due Diligence Summary
When buying an established business it is vital that the prospective business owner examine the business in detail. Business Due Diligence Indonesia (BDDI) specialises in this process. Due diligence is generally conducted after the buyer and seller agree in principle to a deal, but before a binding contract is signed.
Conducting due diligence is the best way for you to assess the value of a business and the risks associated with buying it. Due diligence gives you access to important and confidential information about a business. There is also often a time period specified in a letter of intent.
With this information you can assess the business’s reputation, political exposure, financial position and identify any other risks. It is also an opportunity to have any questions answered about the business. The due diligence process ensures that you get good value for a business. BDDI can be the difference between buying a business that makes you money and buying a business that costs you money.
Due diligence can be performed with different partners such as a lawyer and accountant. Business Due Diligence Indonesia (BDDI) can also assist and play a crucial role in gathering information that is not normally in a company’s “books”. BDDI does this through media research (mainstream and fringe Indonesian press) and source interviews. We also examine other areas of concern such as corruption, any previous or on-going legal disputes, and other issues of reputation.
These additional elements play a critical role in your decision making process to add to the more common coverage such as review of finances, credit, meeting minutes, audit reports, existing contracts, intellectual and fixed assets etc.
Warning Signs for the Buyer
You should be cautious of sellers who:
- have a negative history and reputation,
- have scandals associated with them,
- do not disclose important information (e.g. their reasons for selling, financial statements, licences and permits, staff contracts),
- won’t agree to a trial period or enough time to conduct due diligence (you will need at least 30 days),
- won’t introduce you to their suppliers, landlord or estate agent,
- are involved in legal proceedings,
- are keen to close the deal quickly,
- have a questionable credit record and history.
For more information on how Business Due Diligence Indonesia can support you please contact us. BDDI can also recommend Investigation companies in Indonesia such as Indonesia Private Investigation Agency and Bali Eye Private Investigation Agency.
Honestly, I wish I had this information two months earlier before buying my business. I practically bought a liability that I ended up spending in like a new business. It is a good idea to have an enterprise like this look into a business for you before purchase.
What are the possible issues I can encounter while buying a business? I mean aside legal issues and issues with workers and workflow.
Have you thought of issues like running bankrupt just after buying a business?
The list can be extended by the point when the sellers try to sell their company cheaply. When your own common sense says, “This can’t be? The offer is too good to be true”, then care should be taken.
In any case, I would have an offer thoroughly checked by an external service provider such as “Business Due Diligence Indonesia” before I decide to buy.
Great write-up, really appreciate the insight into the process. Never been through buying a company myself, but I am often asked to weigh in on the total health of an eCommerce company.
I was once in a negotiation between two firms and the seller says they just want to invest in another business. Then I asked of the workers he replied “do with them whatever you wish” Then I knew he is not a good boss and was not willing to show us the contract they employees work on. so I turned down the offer.
Apart from lawyers and accountants which other partner is do BDDI perform with?