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The Anatomy of an Acquisition: Due DiligenceOnce you’ve identified your targets, secured financing and hired advisors, you need to complete due diligence before discussing offers and finalizing paperwork. It’s important to take a holistic approach to due diligence—you want to know as much as you can about the company you may buy, and that is more than just the financial reports. For instance, is the owner emotionally ready to let go of the company? Are there any proposed regulatory changes that could change a hot industry to a dying one? Does the company have any legal disputes relating to HR issues?It’s just as important to look forward at budgets and forecasts as it is to look back at past financial performance. At the same time, accounting irregularities can cause surprises down the road. You don’t want to be in a position of needing to restate earnings because of mistakes made in the way the target is accounting for transactions. Revenue due diligence will help decrease the risk that revenue was characterized incorrectly. As you begin the process, you’ll want to be sure your acquisition process due diligence includes the following items:Quality of earningsValuation and pricingQuality of earningsTax Matters