Once the Intent of Interest (IOI) or Letter of Intent (LOI) is agreed upon and executed, meaning the terms of the sale are accepted by both parties, our work is only 50% completed. Next comes the Asset Purchase Agreement (APA) which is usually created by the seller’s attorney.
In parallel to the drafting and negotiations of the legalese of the APA, additional due diligence is performed by the buyer and their team. Depending on the buyer the team could consist of the buyer’s attorney, consultant, lender, and CPA, or if the buyer is a Corporate, Private Equity, or Venture Capital Group they will have an inhouse team tasked with gathering and evaluating up-to-date financials, practice reports, accounts receivable, real estate (purchase or lease) and the list goes on.
Our team will play a crucial role in tracking the process flow of this information, updating all parties involved, and keeping the deal on track. Time kills deals, if progress is not happing at a reasonable pace, closing probability can drop significantly due to deal fatigue.
Pushing a deal is something that many sellers don’t recognize the immense time commitment required to accomplish. It is nearly impossible for a seller to continue to run their company and have the time, resources, and the experience to effectively close a deal from start to finish. If your practice or company declines during due diligence due to limited bandwidth, this could mean a re-trade of the deal, extended timeline, reduced economics, or worse, a terminated transaction.