Commonstake Partners

The buyer’s first request list

A buyer may ask for records that do not yet tell the same story as management's description of the business. Start by identifying those differences and the people who can explain them.

The reporting periods behind the figures

Identify the reporting periods, business entities and definitions used in the accounts and management reports. Explain any material difference between them with the people responsible for the reporting. A chart that combines different periods or excludes part of the group can create questions that its title does not reveal.

Supporting schedules should make it possible to trace the explanation. The preparation work may identify a reconciliation for the accountants or a missing source record for management to investigate. It should not quietly fill a gap with an assumption.

Responsibilities after the owner leaves

Consider who holds important customer relationships, authorizes spending, handles technical questions and resolves supplier problems. If several of those responsibilities sit with the selling owner, a prospective buyer will want to understand the proposed handover.

Distinguish the responsibilities already covered by other people from those that depend on a future appointment or transition agreement. That helps the owners discuss a realistic timetable without implying that the handover has already happened.

Restricted and confidential records

A request may involve personal information, a confidential customer contract or a document covered by an existing obligation. Agree who can assess it before sending the material. The company's appointed advisers can determine what confidentiality, consent or other arrangements are needed.

Keep the status of the request clear: provided, awaiting an explanation, requiring permission or unavailable. Those positions mean different things to the transaction team. A missing document should not disappear into a list marked complete.

Questions for management

After the first documents are reviewed, a buyer may ask about an unusual cost, a customer concentration or a working-capital movement. Management should know who can answer from the underlying records and which questions need an adviser.

Accounting verification, legal diligence and a valuation require separate specialist work.

Return to transaction preparation

Ask what the buyer needs the document to establish

A request for shareholder information may concern the current holders, the rights attached to each class or the approvals needed for a sale. Sending a file called Shareholders does not establish which of those questions it answers. Read the request, identify the period and explain any limit in the supplied record.

The reply should point to the relevant source and its version. If the document is incomplete, state what remains to be supplied and who is looking for it. A partial response is easier to evaluate when the missing part has a description; an unexplained blank folder invites another round of requests.

Organize the request list

Use one request reference across the question, the response and any follow-up. Retain the buyer's wording when it matters, along with the date or period requested. Keep a separate status for a document that exists but is awaiting permission to share.

A later question may change what the earlier request meant. Do not silently replace the original answer and erase that development. Identify the revised response so the appointed transaction advisers can understand what changed. Access arrangements and the release of sensitive information should follow the process agreed for that transaction.

Notice questions that require an owner decision

A buyer may ask whether the owner will remain after completion, whether a particular liability is included or whether a proposed timetable is acceptable. Those questions need instructions from the authorized people. Marking them as documents outstanding obscures the work that is actually needed.

The request list should therefore connect to a separate owner decision list. The transaction coordinator can follow up on both without answering a commercial question on the owner's behalf.