Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

October 13, 2008

The Importance of Due Diligence

By Joseph Eneldas


ATLANTIC HIGHLANDS, NJ – October, 2008 – While buying a small business may seem to be an exciting venture, you need to do your homework when gathering information on the business. The ‘doing your homework’ process is known as conducting due diligence, meaning exercising care in a transaction. Due diligence is used to investigate and evaluate a potential business purchase. It pertains to all aspects of the past, present, and predictable future of the business you are targeting. Due diligence should be conducted to assure you that the business is what it appears to be. You might find a deal killer in the business, such as bad financial standing or pending lawsuits, which will help you to avoid a bad business transaction. The procedure will also help you obtain information which will be useful to negotiate pricing, estimating the value of assets, and to determine representations and warranties. After the buyer and seller has agreed that they should purse a business transaction and a preliminary understanding has been reached by way of an accepted Offer To Purchase, due diligence should be conducted by yourself and the professionals you have involved with your business purchase, before you sign a contractual business transfer sale contract. In order to perform your investigation, the seller should have prepared some of the information for you such as financial statements and business plans in form of a confidential memorandum. After reviewing what has been handed to you, on site visits to the business should be coordinated, as well as researching into external sources such as customers, suppliers, industry experts, and market research firms. It is important to know that it is impossible to learn every little thing about the business you are interested in, but you will be able to ascertain enough to make an informed decision. The time alloted for due diligence can vary from situation to situation. The preliminary agreement usually spells out how long a buyer has. Taking too much time, or putting too much effort into due diligence can kill a deal. Putting too much effort into due diligence can greatly offend the seller, which can lead them to walk away. To prevent from losing out on your opportunity, you need to prioritize your investigation and analysis by spending your time on the vital issues, and less time on the trivial issues. Throughout the buying process, due diligence is essential to closing the contract. As a seller, make sure that all documents are organized and accessible to the seller, to speed up the buying process. As a buyer, prioritize your tasks within the due diligence effort, in order to succeed in learning important information about the business that will lead you to make an informed decision. If you are interested in buying or selling a business, please contact Achim Neumann, a leading business broker in New Jersey.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or

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Client Testimonials

“Your vetting is simply outstanding, among the best I've seen from a broker.”

Eric H., Investor

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

Double Diamond

“Used A Neumann & Associates to sale my business. could not imagine having done it with out the patience and experience Gary provided. Thanks Gary,”

Dennis Frazier

“Working with Marc and his company was a pleasure. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. Marc handled most of the interaction and he has one of the greatest demeanors. Again, it was a pleasure working with him and his firm.”

Douglas DiCeglio

“I recently completed an acquisition using A Neumann & Associates. Tony Valentino was very helpful and accessible during the entire process. They do a thorough job vetting both parties and got us to the finish line.”

Srini Mudambi

“Claus out of Florida helped us with the sale of our business. We had never done anything like this and him and his team walked us through the process from start to finish. We had some challenges through the process and Claus continued to show up even in the difficult conversations.”

Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs

“A Neumann & Associates is the only business broker I would use or consult with. They have assisted with 3 business sales over the past 15 years with me. They are honest and sincere and have always performed better than my expectations. They are the only one i would use for the sales of my businesses.”

James Belanger, Business Owner

“I wanted to take a second to commend the exemplary customer service from both you [Karin Neumann] and Mr. Valentino. It’s both a rarity in the industry, and very much appreciated.”

Andrew G., Investor

“We worked with Neumann & Associates to investigate the purchase of a research company in 2010 and found Achim to be capable, forthright and realistic. His depth of experience enabled us to fully understand our options, offering creative options that might enable the acquisition. While we didn’t acquire that particular company at that time, we know exactly who to call whenever we’re looking to buy or sell a business.”

Daniel Coates, Buyer
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Contact A Neumann & Associates, LLC

If you are considering selling your business, please contact us to learn more about our comprehensive service spectrum. Our experienced professionals will answer all your questions about selling a privately held business in complete confidentiality. Please fill out our contact form, or call us at 732-872-6777. We will contact you directly and will never identify ourselves to your employees.

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