How can I learn the buyer diligence process?
I currently work on the brokerage side and want to better familiarize myself with the buyer diligence process after award. I understand this is something you learn through reps but was wondering if there is any resources you know of that could help me at least learn the high level about the process. I can’t find any solid resources for this but would love to get a better understanding of how institutional groups work through the traditional processes.
Does your company keep old records?
For reference I have never bought a deal, but I have sold a number as a developer, and the brokerage teams are always intimately involved. The buyer presents an initial due diligence list through the broker which includes demands for things like my blood type, social security number, and the rights to my first born child. I, the seller, then go through the list and strike out everything I don’t have and/or don’t want to give them. The seller accepts 99% of these redlines (which begs the question as to why they were asked to begin with), pushes back on a couple they actually want or need, and then we agree to it.
Your brokerage firm might have old records of these negotiations from previous deals, or at least the list itself. Depending on the firm, they may even have a default list and folder structure.
Once the due diligence list is agreed to, either my analyst or the broker creates a DropBox-style shareable folder, and my analyst then populates subfolders with all sorts of important things: leases, T12s, equipment spec sheets, insurance forms, architect and GC sign offs, etc. Inevitably, there will be 1-2 things that you never got across the finish line or are wrong in some way, and you have to clean them up as fast as you can or identify the issue to the buyer along with an explanation of remedy and timeline for them to accept. Once the folders are full, the buyer reviews the list, often sets up a call to talk through any questions they may have, and then accepts the list.
As the seller, you want to get your folders populated ASAP and get the buyer to accept the DD list, because deal timing, like deposits and go hard dates, is often timed to DD completion. Dragging your feet only gives them an excuse to bail.
As the broker, it is your job to double check (and often control) the DD list and folders, listen when I bitch and moan about unreasonable requests, empathize when I create bullshit stories about why I didn’t complete a certain requirement, and then relay both my angry comments and sheepish excuses to the buyer in a far more professional way in order to keep the deal moving toward closing.
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