People often fall in love with a businessjust as they fall in love with a houseand forget to use their heads as well as their hearts to assess the property. Asking the right question at the right time can save potential buyers a bundle of money or help them avoid making a major mistake. In this completely revised edition of Due Diligence Techniques and Analysis, published in 1996, Bing breaks down the due-diligence process in detail and shows readers how to investigate, step-by-step, a business with an eye to buying or investing in it. In addition, the author identifies the techniques to employ, the questions to ask, the documents to review, and the issues to explore to reach intelligent conclusions about an acquisition. In a 30-year practice as a deal maker representing buyers and sellers, Bing knows where the bones are buried in many deals, providing invaluable insights and expert opinion readers can use to arm themselves when faced with a tough buying decision.
Fifty chapters cover the different aspects of a typical business up for sale, such as ownership, management, marketing, accounting, environmental issues, and culture. The questions and topics discussed in each are preceded by commentary that highlights major areas for study, objectives, and common problems. In this book, you will find: The most comprehensive, powerful, up-to-date set of due-diligence questions ever assembled. Invaluable insights for those contemplating buying or investing in a business, new executives who need to get up to speed on a company or division, anyone conducting forensic investigations, and financiers wondering whether it's time to lend more or pull the plug. Most acquisitions that fail can be traced to failures of due diligence. This book will enable buyers to avoid problems and spot opportunities quickly, making business success much more likely.
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About the Author
Gordon Bing is a Houston-based independent consultant specializing in multimillion dollar acquisitions and mergers in a wide variety of industries. He is the author of numerous books, including Corporate Divestment, Corporate Acquisitions, Due Diligence Techniques and Analysis (Quorum, 1996), and Selecting Your Employer (Butterworth-Heinemann, 2006).
Table of ContentsPreface xiii
Getting Started: Basic Information 1
Preliminary Critical Information 7
Key Early Issues and Alarms 11
Ownership and Capital Structure 17
Directors and Governance 21
Products and Services 31
R&D and Technology 35
Markets and Customers 39
Marketing, Selling, and Distribution 47
Public and Investor Relations 57
Purchasing and Outsourcing 67
Human Resources and Employees 71
Union Issues 77
Employee Compensation and Benefits 81
Retirement Plans, 401(k)s, and ESOPs 85
Culture of the Business 89
Legal and Regulatory Issues 93
Government Business, Lobbying, and Politics 99
Information Systems 105
Insurance and Bonding 115
Environment and Safety Issues 119
Debt, Banks, and Financial Institutions 123
Investments, Hedging, and Derivatives 127
Cash and Cash Management 131
Accounting: General Questions 135
Accounting Policies 139
Accounts and Notes Receivable 143
Fixed and Other Assets 155
Cost of Sales and Gross Profit 163
Selling and General and Administrative Expenses (SG&A) 165
Income Recognition and Backlog 167
Intracompany Transactions 171
Real Estate 175
Investment Questions and Issues 179
Off-Balance Sheet Items 183
Assets and Liabilities Excluded 187
Financial Ratios and Trends 191
Warning Signs 195
Outrageous Improprieties 197
What People are Saying About This
"I have read your new book with admiration. The scope is encyclopaedic and it is a must for anyone involved in analysing any business for any purpose, nationally or internationally. Truly a masterclass in due diligence."
"This book will prove to be the definitive work on the subject of due diligence. It is thorough, readable, and organized in such a way as to be a useful how to for those of us engaged in corporate M&A activity. We all know it is easier to simply buy a business than to buy it for the right price and the right terms. This book will certainly help the reader obtain the right terms."
"Due Diligence should be in the toolkit of any serious executive or consultant needing to know the facts about what's going on in a business. Whether considering an acquisition or improving the controls and performance of an existing company, this book provides the roadmap for assessing everything you need to know."