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Even sellers in New Jersey can perform "due diligence"

The buying and selling of businesses in New Jersey is a common event, and something that keeps the state's economy running. However, business transactions, like potential mergers and acquisitions, should not be rushed through to ensure that the agreed upon sale price is fair.

One part of acquiring an existing business is known as the "due diligence" phase. This phase in the process usually commences after each party has signed the initial letter of intent, and showing that they are both committed to the potential acquisition. After that, the buyer, through due diligence, examines the business they are interested in acquiring to identify potential issues that could affect them, should they go through with the acquisition.

Nonetheless, it does not hurt for the seller to also perform some due diligence him or herself as well. If a person is trying to sell his or her business, it helps to have an idea of what types of issues potential buyers might encounter during the sale.

Business owners looking to sell should make sure their business organizational documents are accessible and in order. In addition, business owners looking to sell should make sure to have all the necessary supporting documentation needed to identify what the business's assets are and identify the business's liabilities. Finally, while it can be a bit painful, business owners looking to sell should take a step back and objectively look for flaws in their business, so they can proactively have them fixed.

If both parties to the acquisition identify potential problems to the acquisition in advance, it can help to resolve these issues, which can save time. In the end, both parties benefit from due diligence. An attorney may be able to explain the due diligence phase in more detail, so business owners can assess how it applies to them and their potential acquisition.

Source: Forbes, "Trying To Sell A Business? You Need To Look At It The Way A Buyer Would," Steve Parrish, June 1, 2015

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