01 · Target identified, before the LOI
Frame your offer before signing the letter of intent.
At this stage, you have neither full access to the file nor certainty on the price. Diligeo establishes what the available documents show, what they leave out, and where the negotiation will play out: you face the seller as the buyer who knows the file.
Your situation
The company is identified and the first discussions are under way. The seller has shared a few documents, rarely more than ten. They are gauging how serious you are; you have to move forward without full visibility.
The question to settle
Do you make an offer, at what price, on what terms? The LOI sets the course for the rest of the negotiation: a mispriced offer or a missing condition precedent comes due at audit time, or later.
The documents
The documents to gather.
From 3 to 20 documents, depending on what the seller has already shared: the review starts with what you have. Only the financial statements are essential.
- Balance sheets and income statements for the last three fiscal years
- Interim financials if the current fiscal year is well under way
- Commercial lease
- Company registration extract (Kbis) and articles of association
- Org chart and aggregated payroll for a recent month
- Order backlog
- Main customer and supplier contracts
- Vehicle, finance-lease, and long-term rental contracts
- Social-security compliance certificates (URSSAF) and tax-compliance certificates
The deliverable
A pre-audit report that takes a position.
The report covers: presentation of the target, financial performance adjusted on the basis of the available documents, a framing of the valuation, points requiring attention, and the structuring of the offer. It closes with a recommendation based on the documents available in the file: make an offer, hold off, or walk away.