Performing due diligence on a business being considered for purchase should be conducted much like a surgical procedure. The operation should be an organized examination of the vitals of the company.

This stage of buying a business begins once you have made your offer and the seller has accepted. A contractual agreement has been entered into between the buyer and seller outlining the price and terms of the sale. The contract is contingent upon the business passing "inspection," which is the due diligence period allotted to the buyer.

Since it is the buyer's responsibility to uncover any potential problem areas of the business, it is important to be prepared. This is the time to cut to the chase with checklist in hand to confirm all material facts of the business and validate what the seller has represented. The buyer, being the leader of the procedure, may call in specialists, such as an attorney to examine the legal aspects of the business and an accountant to scope the numbers. Depending on the size of the business, a buyer will typically have about two to four weeks to complete the process.

The following checklist represents vital aspects of a business that a buyer may wish to examine during the due diligence period. This checklist is not meant to fit all scenarios or to be all-inclusive, but to serve as a guideline.

•Organization and Good Standing
•Accounting and Financial Information
•Physical Assets
•Real Estate
•Intellectual Property
•Employees and Benefits
•Licenses and Permits
•Environmental Issues
•Reports, Studies, Appraisals
•Taxes
•Contracts, Agreements, Leases
•Product or Service Lines
•Customer Information
•Litigation
•Insurance Coverage
•Vendors, Suppliers, & Professional Service Providers
•Market, Marketing and PR Campaigns