M&A Advisor Tip: COVID-19 Era Due Diligence, Part 4

M&A buyers are still active in the midst of this uncertain business environment. However, they are mindful of added risks caused by COVID-19.

These are some financial questions that are likely to come up in future due diligence in light of COVID-19:

1. Did the business utilize any government relief, debt deferrals, or rent reductions?
2. In terms of government relief, was the business accurately entitled to that relief and did they meet requirements for debt forgiveness?
3. Did the business take on new debt that would impact the viability of an acquisition?
4. Are revised financial projections reasonable?
5. What is the financial condition of the business’s key customers?
6. Are there risks to collecting on accounts receivable?
7. What is the seller doing, if anything, to reduce or renegotiate operating expenses?

Business owners looking to sell soon should review their current practices now, so they’re prepared to address buyer concerns.

Read our previous posts on coronavirus era M&A due diligence:

• Part 1: Human Resources
• Part 2: Technology
• Part 3: Contracts

For further information or to discuss a current M&A need, contact Al Statz, 707-781-8580 or alstatz@exitstrategiesgroup.com in our Petaluma, California office.