Get the most out of selling your business: Sell-side due diligence for the restaurant industry

Conducting sell-side due diligence helps increase the likelihood of a business sale’s success. Performed correctly, the process uncovers opportunities for sellers to enhance their company’s value prior to a sale and facilitate a faster close time.

In the restaurant industry, where there’s a strong level of M&A activity and intense competition for growth, companies contemplating a sale can often advance their strategic goals by leveraging sell-side due diligence.

Here are the answers to important questions sellers face prior to and during the process.

Benefits

Among its benefits, sell-side due diligence can help business owners identify and assess issues and trends that either positively or negatively impact business value from a buyer’s perspective. This helps owners gain early, vital insight, which can help establish a strategic framework for selling a company later on.

Put your best foot forward

Backed by due diligence findings, sellers can project greater confidence in their position, helping to bolster a buyer’s perception of the company. This can help a business owner avoid major surprises or gaps in expectations that could delay or kill a deal. There are also generally fewer unforeseen costs and added professional or consulting fees, which can result from a lesser degree of preparation.

Enhance deal value

Insight gained through this process can help sellers proactively manage the way they explain financial results, accounting policies, processes, and other aspects of the business during negotiations. It can also allow them to better anticipate buyers’ questions — keeping the discussion focused on the strategic basis for the transaction. Analysis performed during due diligence can reveal critical deal points or transaction structures that could help increase deal value and after-tax proceeds.

Manage workflow

The demands placed on a company’s internal resources to support a transaction can be intense, and senior management is usually hit hardest as they struggle to balance go-to-market preparations with maintaining successful operations. Sell-side due diligence helps avoid excessive demands on management’s time and eases the potential disruption of buyer requests. It also helps a seller proactively manage the stress of a future transaction — providing early access to company information a buyer might request.