Due Diligence Checks
Business or Personal Enquiries
Due diligence has many definitions attached to it from investigation to legal meanings. However, what we focus on is how due diligence relates to your personal risk.
When we are running due diligence we are looking into the area of products and services, companies individuals and all aspects of risk to you, conducting the correct and in-depth research that allows you to make informed decisions about what should and should not be done when trying to break into that market segment or when entering into a new business or otherwise relationship with previously unknown parties.
However, the definition of due diligence in reference to corporate risk is greatly different to the processes used in order to actually get the information. As with many things in life it is easier said than done and unfortunately this also means that in order to carry out such in-depth research not only will time be a high factor but also will the cost.
We can greatly assist with these processes and help you make the right choices earlier and more effectively and with the correct and required confidence. Some of the areas we often suggest or check on are listed below:
- Business records analysed
- Registrations checked
- Business visits organised
- Local and national reputations verified
- Mystery shopping /visits records
- Trading styles and verification
- Directors information investigated
- Trade references gathered
- External & Internal disciplinary matters
- Competitor intelligence
- Photographic or video verification
- Assets and equipment verified
- Press and media reports
- Property and assigned business premises
- Product recognition
- General summary and conclusions
For instance, when looking to buy a restaurant even though your intuition – and your gut, might be telling you that it is the right decision for you, this particular industry is extremely competitive and there are numerous factors you will need to consider. We will allocate a period of time (experts recommend four weeks) to observe the operation of the business. This should enable you to get a good feel and to smooth out any peaks or troughs before you make your final decision.
We will suggest that you have several key areas to investigate including the premises, the financials, the equipment, lease, the operations and the employees. If possible we can bring in experts to help including a qualified Accountant who is thoroughly experienced in the restaurant business. As you progress through your observational period we will continue to apply our overall business and common sense, watching how everything operates, especially from a customer perspective.
When dealing with financials you must know that the restaurant business has a large quantity of cash sales. Surprisingly often many business owners decide to siphon off some of this cash for themselves, not reporting it to save on taxes. In the long run this is not a good idea as this money could have been applied towards a marketing budget or buying new business assets and if siphoning is going on it can be quite hard to prove.
When we are inspecting the property we look at it from an overall perspective as well as in detail. Can it be adequately seen from nearby major roads; is signage appropriate, well-maintained and presentable? Are there any other major competitors and are they overbearing? What is your first impression when arriving in the parking lot?
When you analyse the operation of the business you want to learn how the current owner operates and whether there are any immediate issues or challenges that you will have to take into account. Look closely at any “special arrangements” or unique selling points that involve a particular individual, a style or presentation of the business, You want to be sure that these elements are transferable or will be present when you take over.
A restaurant will likely rise and fall on the strength of its employees. While you can expect a high turnover in any kind of restaurant, if you see loyal staff and a good “team spirit” this can be a definite plus. Checks are taken to see how people are hired, the terms and conditions offered to them and exactly how they are paid. Depending on the country you choose to make the enquires there are many different areas you will want to consider, some were highlighted previously and an indication of avenues can be shown here, but is not limited to these areas and of course we are just using a restaurant as an example but this could be any sort of project or area.
If you require more details regarding this service or would like to speak to one of our team please contact us here or call us directly on 0845 512 0440 where someone with experience in the matter can assist you more.