Understanding The M & A Due Diligence Process - with Elliott Holland

Nick is joined by Elliott Holland, an expert in due diligence, particularly quality of earnings. Elliott shares insights into the due diligence process, focusing on the importance of financial analysis and commercial and operational considerations. He emphasises the need for a robust due diligence process, especially for smaller businesses, to ensure accurate financial reporting and mitigate risks.

They also cover key aspects such as working capital, key man risk, and strategies for successful acquisitions., highlighting the significance of differentiation in a competitive market and the importance of experienced buyers in securing successful deals. 

KEY TAKEAWAYS

• Quality of earnings is crucial in the due diligence process for selling a business, providing a mini audit on private businesses to ensure accurate financial reporting.
• It is important to address key man risk, financial disrepair, and reliance on one vendor or customer to maintain the value of a business during a sale.
• Working capital should be carefully assessed and negotiated to ensure a smooth transition for the new owner and avoid financial strain post-transaction.
• Differentiating oneself in a crowded market of acquisition entrepreneurs can be achieved through experience, stability, and a willingness to put skin in the game.
• No money down deals are speculative and may not be feasible in most cases, especially for new entrants in the market. It is essential to have realistic expectations and be prepared to negotiate effectively.

BEST MOMENTS

"I think the no money down stuff is speculative and oftentimes not worth the juice isn't worth the squeeze." 

"I think more people know about them now. And also, I think the skin in the game concept is real." 

"I think the other thing is there's a metric in private equity, I'm sure you saw this, where when you swap out leadership and put in your own person, the general return on that is pretty high." 

"I think it's primarily contracts and bonuses, but let's take a step back and say on this, let's be smart." 

VALUABLE RESOURCES

eholland@guardianduediligence.com

www.GuardianDueDiligence.com (404) 441-2637

Linkedin.com/in/elliottholland @ElliottEHolland

Youtube.com@guardianduediligence

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Nick Bradley is a renowned entrepreneur, investor, speaker, and business growth expert.

His background is growing and scaling Venture Capital and Private Equity backed businesses globally. Over the last decade, he has completed 117 acquisitions and 25 business exits with a combined valuation of over $5bn dollars.

His mission is to help business founders build valuable businesses and create life-changing exits so they can realise freedom, wealth, and impact.

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