Many business-owners look to sell at some point. The reasons for selling may vary but often it is the opportunity for the owner to capitalize on the years of hard work that have gone into building up his or her business.
Poland has been constantly progressing ever since the fall of the communist regime in 1989. The country successfully managed to catch up with other competitive countries in the area and has now become a country preferred by foreign investors. Many Polish small and medium enterprises have grown during the last 30 year and now the Polish business-owners look for opportunities to sell their businesses and look forward to receiving the offers from potential buyers.
There are many ways of managing a sale process from the perspective of a business-owner. The most common scenario for SMEs is signing the letter of intent, carrying out the due diligence analysis and signing the sale and purchase agreement. This is the traditional model.
Once the letter of intent has been signed, the buyer will start its due diligence process. The basic legal principle underlying a company purchase is caveat emptor (buyer beware). In other words, once the buyer has bought the business, it cannot complain afterwards. The vast majority of buyers are therefore keen to find out everything they possibly can about their target business before paying the purchase price. Due diligence typically breaks into three principle categories.
1. Financial due diligence – usually carried out by a firm of accountants; this is one of the most important elements of the buyer’s due diligence and will include a detailed examination of past trading performance, future forecasts, accuracy of reporting systems, assets and working capital. Sellers should expect to be faced with many requests regarding financial and accounting information.
2. Legal due diligence – usually carried out by the buyer’s lawyers; this aspect will focus on matters such as legal structure and ownership, contractual terms, loans and bank security, property matters, employees, intellectual property and environmental compliance. Whereas typically the buyer’s accountants might spend some time on site at the commencement of the financial due diligence, the legal due diligence tends to be carried out remotely. The buyer’s lawyers will submit a due diligence questionnaire requesting information and copies of relevant documents. Then it is sent on to the buyer’s lawyers who will then prepare a due diligence report to the buyer. 
3.Tax due diligence – sometimes included as part of the financial due diligence, the buyer will want to understand whether all taxes have been paid and what is the risk that the tax authorities may challenge the company’s results.
Most buyers will also want to carry out a commercial due diligence which typically will be done by the buyers representatives. Commercial due diligence focuses on the strength and quality of customer relationships, contractual terms, internal business processes and anything else the buyer considers important commercially.
The results of the due diligence process will be the basis for the buyer to take the final decision on the purchase.

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