If you are thinking about buying a business in Bali to fulfill your entrepreneurial dream, or you want to expand your existing company through business acquisition, it is best for you to conduct due diligence.
Make sure that you don’t skip this important process because this is how you can understand the target company thoroughly regarding their finances and operations.
This article shows you how to conduct due diligence when buying a business in Bali.
Important Things to Verify During Due Diligence
There are many aspects you should consider during due diligence when buying a business in Bali:
1. Analyse all financial documents such as credit reports, income statements, cash flow statements, tax returns, all debts and assets, product inventory, accounts payable and receivable, and others.
Your accountant should meet with the seller’s accountant to review, verify, and possibly recast all the numbers.
2. Audit the business structure and its operations such as the company’s articles of incorporation, investors and shareholders, marketing plan, business plan, trademarks, brand identity, and others.
Understanding how the business generates profits, its competitors, and its market penetration and trends can help determine the company’s potential.
3. Verify all customer information and databases. Get to know how the company acquired and retains these customers.
4. Review all contracts and agreements in regard to partnerships, loans, equipment leases, lines of credits, mortgage, stock purchase, mergers and acquisitions, non-disclosure, etc.
5. Inspect its past and current legal issues. You need to check if the company has proper licenses, permits, and relevant insurances in place as well.
6. Validate all information of employees. Go through the company organisational chart and its list of employees. Then, identify the key personnel and their corresponding responsibilities in the company. You will also want to check employment contracts, HR policies, employee payroll, and benefits, etc.
7. Analyse all intellectual property and information of the company. For instance, review all copyrights, patents, trademarks, and other unique intellectual information.
8. Audit all its property and define their market value. Request for a full inventory of the company’s real estate and physical assets such as equipment and automobiles.
How to Conduct Due Diligence
Due diligence can be a long and complicated process because you need to dig deep into a company’s history and record.
However, this is all worth it because the information you get will allow you to have a much better insight, and thus leading to a more informed decision when buying a business in Bali.
Therefore, due diligence is not something you should undertake alone especially when you don’t have a team of in-house experts.
You should always get assistance from an accountant and a lawyer who are experienced and have deep expertise in this area.
Their guide enables you to spot any red flags that most business owners will miss, preventing you from buying a business in Bali that you may regret later.
Here’s a simple process for conducting due diligence:
- Seek assistance from a reputable due diligence provider.
- Sign a confidentiality agreement with your prospective business partner.
- Work with your due diligence provider and prepare a due diligence checklist.
- Go through the checklist meticulously with your accountant and lawyer.
- The due diligence specialist will conduct the due diligence process per the checklist on your company’s behalf.
Cekindo as Your Due Diligence Partner before You Buy a Business in Bali
Cekindo provides the most comprehensive and innovative due diligence solutions when buying a business in Bali.
Simply said, we help you transform your business. This is because you will make faster and smarter buying decisions when our due diligence insights help you drive the deal.
Strategic decisions are crucial when buying a business in Bali. Therefore, failure to conduct thorough due diligence can lead to bad and detrimental business decisions.
Cekindo can handle your business purchase deal at any level to ensure a smoother, more efficient process with the right decision. Fill in the form below now to discuss your business needs.