America's Benefit Specialist December 2023

IS YOUR FIRM DILIGENCE-READY?

By Brett Rosen Rosen Advisory Roswell, Georgia brett@rosenadvisory.com

The M&A due-diligence process is a critical phase of any merger or acquisition transaction. It involves comprehen sive research and analysis on the buyer’s part to thoroughly evaluate the target company, assess potential risks in the deal, and uncover aspects of the seller’s business not evident during the process of courting and offer preparation. As a potential seller, diligence can be a stressful time. You have a letter of intent signed and in hand, and you are begin ning to see the finish line to the close of the transaction. With so much at stake, how can you ensure that you know diligence will not create a change in the deal terms or purchase price? How can you ensure the deal does not fall apart? The good news is that, with some proper planning and preparation, you can, in fact, sail through the diligence process with confidence. Here are the essential areas in the M&A diligence process

• Be prepared to share commission statements, expense records and explanations of one-time expense items. LEGAL DUE DILIGENCE • A buyer will conduct a thorough review of all legal docu ments, contracts and agreements. • Identify any pending or potential legal disputes, litigation or regulatory issues. • Examine intellectual property rights, patents, trademarks and copyrights. • Review employment contracts, employee benefits and employee-related matters. • Evaluate compliance with licensing of the firm and each employee based on their role. CUSTOMER DUE DILIGENCE • Assess the strength of customer relationships and revenue concentration. • Evaluate your growth potential.

that you need to be prepared for: FINANCIAL DUE DILIGENCE

• The buyer will examine your historic financial records and ensure the pro forma (go-forward financial projections) are accurate.

18 ABS | benefitspecialistmagazine.com