Due Diligence Guide

Never offer, provide or say anything to a potential buyer that you cannot substantiate with proof during the Due Diligence period.  The buyer may ask for proof – and if it is not available, it could put your sale at risk.  Your potential buyer will be paying close attention and will base his offer on the information you have provided.

So, be prepared to furnish essential information as requested to verify what has been said and presented!

Information You Will Want to Have Available Throughout the Due Diligence Period;

1. Three to five years of factory financial statements and federal tax returns
2. Current year-to-date financial statements
3. Worksheet used to establish “Continued Use Value”
4. Depreciation Schedule (make sure all personal items are off the list)
5. List of other vehicles and their fair market value (service, parts vehicles, wrecker, and demonstrators)
6. Provide list of dealer add-backs, all non-productive expense on statement (indicate where they are charged on the statement)
7. List of any leasehold improvements and value of improvements if any
8. List of any leased equipment and terms of lease, with transferable value (Leases expected to be assumed by buyer)
9. Special factory reports (i.e., Toyota Dealer Performance Evaluation or Ford Dealer Performance Report – Form 1984, etc).
10. Planning volume from the factory
11. List of managers, their tenure, titles and compensation
12. Proxy from family members or silent partners approving your ability to sell the business
13. Copy of business real estate property lease - or -
14. Copy of most recent MAI appraisal of the offered for sale together with the business
15. Copy of any other documents associated with real estate property, surveys, plot plans, deeds, tax bills, pictures, etc…
16. Copy of any major contracts (employee, vendors or customers) that affect the business
17. Copy of all special license and franchise sales service agreements or summary of agreements
18. Estimated shrinkage/water inventory of used vehicles and parts.

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