Thread by @SBA_Matthias

In this thread, I am going to cover best practices with conducting due diligence on a seller during the process of a business acquisition.

#sba #smb #acquisitions #entrepreneurs #eta

1/x: In a business acquisition, one of the items that a bank will do during the pre-closing stage following loan approval, is having due diligence searches ordered for the seller involved in the acquisition

#sba #smb #acquisitions #entrepreneurs #eta

2/x: These searches typically include litigation searches, federal and state tax lien searches, and also UCC state level searches

#sba #smb #acquisitions #entrepreneurs #eta

3/x: Depending in the bank & also if the purchase is an asset purchase or a stock purchase, searches may be required on both the seller's entity and the seller individually

#sba #smb #acquisitions #entrepreneurs #eta

4/x: One of the prudent & recommended things that a searcher can do before executing a letter of intent with a seller is to conduct a free search on the secretary of state website and local court websites for the state in which the target business is located.

5/x: Doing this can help avoid any surprises that may come up following loan approval that may cause the deal to go sideways or the bank to determine that it does not want to proceed with closing the deal.

6/x: Working with a qualified attorney that specializes in business acquisitions can help to mitigate the potential risk associated with pending seller litigation. For example, some attorneys will recommend as an abundance of caution setting up a post-closing escrow.

7/x: Depending on the nature of any litigation in due diligence searches, the most prudent course of action may be waiting to close until it is resolved. As always, take the advice of your attorney on how to proceed when litigation comes up on the seller during the deal process.

8/x: If you found this thread useful, please feel welcome to re-Tweet to share with searchers in the SMB acquisition space. If you're working on a search and would be interested in a free consultation to discuss financing options, also please feel welcome to DM me.

9/x: For any searchers in the SMB acquisition space looking for an attorney, the team at Pioneer Capital Advisory LLC recommends @smblawgroup owned by @SMB_Attorney, @KHendersonCo & @Sam_Rosati

#sba #smb #acquisitions #entrepreneurs