The due diligence phase of a transaction is when “the rubber meets the road”. Business owners often unwittingly make short term decisions without considering that they are deal-breakers tomorrow. They make decisions for expedience, based on present circumstances rather than future liabilities.
So what are some of these deal-breakers? High on the list is any inordinate dependency on factors outside the owner’s control. These include too much revenue from one customer, too much risk from a sole supplier or too much dependence on technology controlled by outsiders.
Before making that decision ask yourself: Why would a buyer want your company if it is dependent on outside technology? The buyer would likely discount your value or worse, acquire the technology from the outsider and cancel the deal.
The bottom line to maximizing value — and assuring a successful exit — is to have a formal exit / succession plan and implement it.
