Revolutionizing Due Diligence with DueDilio W/ Roman Beylin - Watch Here. 

Here is what my team and I learned from this interview: (These are notes from team members, writers, sometimes AI, and even listeners who submitted what i learned loosely edited and shared here) - If it seems a bit unrefined, you're reading our notes, so. yeah. -Ron

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About The Guest(s): Roman Beylin is the founder and CEO of DueDilio, a marketplace for highly vetted due diligence service providers. He has a background in finance and investment banking and started his own business before launching DueDilio. Roman is also the creator of the newsletter The Business Inquirer, where he provides insights and analysis on various deals and transactions.

Summary: Roman Beylin, founder and CEO of DueDilio, shares his journey into the world of mergers and acquisitions (M&A) and the inspiration behind creating DueDilio. DueDilio is a marketplace that connects business buyers with highly vetted due diligence service providers. Roman explains the process of using DueDilio, from submitting an LOI to receiving proposals from service providers. He also discusses the importance of selecting the right team members for due diligence and offers tips on how to choose the best service providers. Roman highlights the most frequently requested services, such as financial due diligence and legal support, and emphasizes the need for marketing due diligence in understanding a company's customer acquisition strategies. He also mentions the vetting process for service providers and the one-strike policy for client complaints. Roman concludes by discussing the current state of deal flow and the opportunities in the M&A space.

Key Takeaways:

• DueDilio is a marketplace that connects business buyers with highly vetted due diligence service providers.
• The most frequently requested services are financial due diligence and legal support, but marketing due diligence is also crucial for understanding customer acquisition strategies.
• When selecting service providers, it is important to speak with multiple candidates to ensure a good fit and rapport.
• DueDilio's vetting process includes a face-to-face interview, review of past work, background checks, and speaking with past clients.
• DueDilio's referral fees are based on successful hires, and service providers do not pay a monthly fee to be part of the network.

Quotes:

• "The best way to learn about something is, A, go do it yourself, B, write about it." - Roman Beylin
• "There's a long line of people before me, so I get it. Better late than never." - Roman Beylin
• "Due diligence is a broad term. We have over 25 different options for what someone can select for different types of due diligence." - Roman Beylin

Article:

Roman Beylin: Revolutionizing Due Diligence with DueDilio

In this thought leadership article, we explore the innovative platform DueDilio and its founder and CEO, Roman Beylin. Through a comprehensive analysis of the transcript from the How2Exit Podcast, we delve into the main themes discussed, including the origin story of DueDilio, the importance of due diligence in mergers and acquisitions, the services offered by DueDilio, the process of vetting service providers, the current state of deal flow, and the future outlook for DueDilio. By examining these themes, we gain valuable insights into the world of due diligence and the role that DueDilio plays in revolutionizing the industry.

Introduction: The Birth of DueDilio

Roman Beylin, the founder and CEO of DueDilio, stumbled upon the world of mergers and acquisitions (M&A) by accident. After selling his own business and experiencing the small-scale exit process, Beylin became fascinated with the world of small business M&A. This led him to start the newsletter "The Business Inquirer" as a way to learn more about the space and connect with like-minded individuals. Through the newsletter, Beylin received numerous requests for assistance with due diligence, which sparked the idea for DueDilio. Thus, DueDilio was born as a marketplace for highly vetted due diligence service providers, offering a wide range of services to business buyers.

The Importance of Due Diligence in M&A

Due diligence is a critical component of any M&A transaction, regardless of the size or nature of the deal. It involves a comprehensive examination of the target company's financial, legal, operational, and marketing aspects to uncover any potential risks or hidden issues. Beylin emphasizes the importance of financial and legal due diligence as table stakes in any deal. However, he also highlights the significance of marketing due diligence, particularly in understanding the company's customer acquisition strategies and potential for growth. By conducting thorough due diligence, buyers can make informed decisions and mitigate risks associated with the acquisition.

The Services Offered by DueDilio

DueDilio serves as a marketplace or network of highly vetted due diligence service providers. The platform offers a wide range of services, including financial due diligence, legal due diligence, technology due diligence, commercial operations, and more. Beylin and his team have built a network of over 200 service providers, ensuring that clients have access to the best professionals in the field. The process begins with clients submitting their project details and requirements, after which DueDilio matches their project against the database of service providers. Within two business days, clients receive proposals from multiple providers, allowing them to choose the best fit for their needs.

The Vetting Process for Service Providers

DueDilio has a rigorous vetting process to ensure that only the best service providers are included in their network. Prospective service providers must fill out an application and undergo a face-to-face interview to assess their background, experience, and client portfolio. DueDilio also reviews past works and requests to speak with past clients whenever possible. Additionally, a basic online background check is conducted to ensure there are no red flags. DueDilio operates on a one-strike policy, removing any service providers with legitimate client complaints. This thorough vetting process ensures that clients have access to reliable and trustworthy professionals.

The Current State of Deal Flow

Deal flow, the number of potential investment opportunities available, is a crucial indicator of the health and activity in the M&A market. Beylin notes that deal flow has been steadily increasing, with DueDilio experiencing a 15-20% rise compared to the previous year. However, he also acknowledges a temporary dip in deal flow when interest rates started to rise, causing some hesitation among buyers and sellers. Despite this, deal flow has picked up in recent months, indicating a positive trend in the market. Beylin also mentions an increase in broken deals during the due diligence phase, highlighting the importance of thorough analysis and vetting.

The Future Outlook for DueDilio

DueDilio is still a relatively young platform, having been launched two years ago. Beylin sees significant opportunities for growth and expansion in the due diligence space. As M&A activity continues to increase, DueDilio aims to scale its operations, automate processes, and spread awareness about its services. Beylin believes that the platform can provide valuable resources and support to business buyers, helping them navigate the complex world of due diligence. With the growing ecosystem and educational resources available, DueDilio is well-positioned to become a trusted partner for individuals and companies involved in M&A transactions.

Conclusion: Revolutionizing Due Diligence with DueDilio

DueDilio, founded by Roman Beylin, is revolutionizing the world of due diligence in mergers and acquisitions. By providing a marketplace of highly vetted service providers, DueDilio offers a comprehensive range of due diligence services to business buyers. The platform streamlines the process, making it faster and more efficient for clients to find the right professionals for their needs. With a rigorous vetting process and a commitment to service, DueDilio ensures that clients have access to reliable and trustworthy experts. As the M&A market continues to grow, DueDilio is poised to play a significant role in supporting and facilitating successful transactions.

Key Concepts from our team and A.I.:

Concept 1: Accidental Journey Into Small Business M&A

The podcast reveals an interesting story of how Roman Beylin found himself immersed in the world of small business mergers and acquisitions (M&A) by accident. Initially starting his career in traditional finance as an investment analyst, Beylin eventually ventured into entrepreneurship, selling alternative data to hedge funds.

It was through his own experience of selling his business and achieving a small exit that Beylin's interest in small business M&A was piqued. While he had exposure to larger mergers and acquisitions in the investment world, he realized that he knew little about the smaller deals that take place in the small business sector.

Driven by his curiosity and desire to learn more about this space, Beylin decided to take action. He purchased a small personal branding business, ran it for a period of time, and subsequently sold it. This hands-on experience allowed him to gain practical insights into the intricacies of small business M&A.

To further deepen his understanding and share his knowledge, Beylin started a newsletter called the Business Inquirer. Over the course of three years, the newsletter has evolved, providing a creative outlet for Beylin and allowing him to engage with a wide range of deals and individuals in the industry.

Through the newsletter, Beylin began receiving inquiries from people seeking assistance with deal analysis and due diligence for various acquisitions. This influx of requests sparked an idea in Beylin's mind - why not create a resource and marketplace that makes it easier for individuals to find the help they need in the M&A process?

And thus, the concept for DueDilio was born. Beylin recognized the need for a centralized platform where individuals could connect with experts and professionals in the field of small business M&A. His accidental journey led him to identify a gap in the market and develop a solution to address it.

Beylin's story highlights the power of curiosity, adaptability, and seizing opportunities as they arise. Although his path into small business M&A was not planned, he embraced the unexpected and leveraged his experiences to carve out a niche for himself in the industry.

Concept 2: Monetizing Through Referral Networks

In the podcast, Ronald discusses how he too monetizes this podcast through a referral network. He explains that people often reach out to him asking for recommendations or connections to various service providers. Ronlad has created a database called the Know a Guy CRM, where he matches people who need services with trusted individuals or companies that he has personally worked with or knows through his network.

Beylin's referral network is primarily focused on due diligence services for small business mergers and acquisitions. He has built a network of over 200 service providers, including M&A attorneys, financial due diligence experts, technology consultants, and more. When a business buyer approaches Beylin with their needs and budget, he matches them with the appropriate service providers from his database.

The process starts with the buyer submitting a letter of intent (LOI) for a potential business acquisition. Once the LOI is accepted, the due diligence phase begins. The buyer then contacts Beylin and provides details about their transaction, including the type of business they are buying and their specific needs and budget. Beylin helps them determine their requirements if they are unsure.

Once the project scope is finalized, Beylin matches the buyer's project with service providers in his database. He collects proposals from these providers within two business days and shares them with the client. The client then selects the service provider they want to work with, and if they end up hiring them, Beylin receives a referral fee.

The primary focus of Beylin's referral network is due diligence for small business mergers and acquisitions. However, he also connects clients with M&A attorneys who can help with drafting an LOI, negotiating closing deals, and other legal aspects of the transaction.

Concept 3: Vetting Process For Team Members

The podcast provides insights into the vetting process for team members in the context of small business M&A. Roman Beylin, the guest in this podcast, discusses the importance of selecting the right team members and offers advice on how to ensure a good fit.

Beylin emphasizes the need for thorough pre-vetting and recommends speaking to at least two service providers before making a final hiring decision. He acknowledges that while service providers may look good on paper, it is essential to assess their rapport and communication style to determine if they align with the client's needs and preferences.

To assist with the selection process, Beylin's company provides content on their website and knowledge center, including an article with ten questions that should be asked during the vetting process. These questions likely cover areas such as experience, skillset, previous clients, and specific project expertise.

Beylin also suggests presenting multiple proposals to clients, typically five to ten, for a typical project. This approach allows clients to compare and evaluate different service providers and have conversations with at least two or three of them before making a final decision. This process ensures that clients have a range of options and can make an informed choice based on their specific requirements.

The podcast further discusses the challenges of letting go of team members who are not working out. Beylin shares his own experiences of holding onto people or contractors for too long, which resulted in budget overruns and subpar outcomes. He advises listeners not to fear pulling the plug on team members who are not meeting expectations, as it is crucial to prioritize the success of the project or business over personal concerns.

Beylin emphasizes the importance of caring and having a genuine interest in the success of the project or business. He suggests that mediocre service providers often know they are not performing at their best and are merely collecting a paycheck. By not taking action, clients are not doing themselves or the service providers any favors.

When it comes to vetting service providers for his database, Beylin explains that there is a process in place. Interested individuals must fill out an application on the company's website. Afterward, there is a face-to-face interview where Beylin delves into the applicant's background, project experience, skillset, and client history. This interview allows Beylin to assess the applicant's suitability for the database and determine if their skillset aligns with the needs of potential clients.

Overall, the vetting process for team members in small business M&A involves thorough pre-vetting, asking the right questions, comparing multiple proposals, and conducting face-to-face interviews. Beylin's approach ensures that clients have access to high-quality service providers who are a good fit for their specific needs. By prioritizing the success of the project or business and making informed hiring decisions, clients can increase their chances of achieving favorable outcomes.

Concept 4: Importance Of Thorough Due Diligence

One of the key aspects of the vetting process is conducting thorough due diligence. This involves investigating and verifying various aspects of the potential service provider's background, skills, and past work. The importance of thorough due diligence cannot be overstated, as it helps to ensure that clients are making informed decisions and mitigating potential risks.

One area where due diligence is crucial is in the financial aspect of a business. Financial due diligence involves verifying the accuracy and reliability of a company's financial statements and other financial data. This is particularly important when buying a business, as it helps to identify any potential financial risks or discrepancies. By thoroughly reviewing past quality of earnings and financial deliverables, clients can gain a better understanding of the financial health and stability of the business they are considering acquiring.

Legal due diligence is another critical area that should not be overlooked. Conducting a thorough legal due diligence helps to identify any potential legal risks or issues that may impact the business. This includes reviewing contracts, agreements, and any ongoing legal disputes. By ensuring that the legal aspects of a business are in order, clients can avoid potential legal liabilities and protect their interests.

In addition to financial and legal due diligence, other areas that should be thoroughly investigated include marketing and client acquisition strategies. Understanding how a company acquires clients, the effectiveness of their marketing efforts, and the return on investment is crucial for the success of any business. By conducting thorough due diligence in this area, clients can identify any potential gaps or areas for improvement in the company's marketing strategy. This can help them make informed decisions and develop strategies to drive growth and increase profitability.

Overall, thorough due diligence is essential for making informed decisions and mitigating risks in small business M&A. By thoroughly investigating and verifying various aspects of a potential service provider's background, skills, and past work, clients can ensure that they are selecting the right team members for their specific needs. This includes conducting financial due diligence to assess the financial health and stability of a business, legal due diligence to identify any potential legal risks or issues, and marketing due diligence to understand the effectiveness of a company's client acquisition strategies. By prioritizing thorough due diligence, clients can increase their chances of achieving favorable outcomes and minimizing potential risks.

Concept 5: Deal Flow Is Increasing

The podcast suggests that deal flow is increasing in the current market. The speaker mentions that they have seen a 15-20% increase in deal flow compared to the previous year. However, there was a slight dip in deal flow when interest rates started to rise, which caused some hesitation among buyers and sellers. Despite this, the speaker notes that deal flow has picked up over the last two months.

The speaker also mentions that there are more broken deals than last year, indicating that the volume of deals that fall apart during the due diligence process has increased. This could be due to various reasons, such as disagreements between buyers and sellers, financial uncertainties, or changing market conditions.

Ronald shares what he's seeing as the behavior of private equity firms in the current market. They note that these firms are being more selective and are looking for businesses that perform well during uncertain times. This includes industries such as health, pets, veterinary services, dental roll-ups, and leading technology, particularly AI-related ventures. The speaker also mentions that strategics, or companies looking to acquire businesses for their customer lists, products, and intellectual property, are active in the market.

Overall, the podcast suggests that deal flow is increasing, with more businesses being bought and sold compared to the previous year. However, there are challenges and uncertainties in the market that can lead to broken deals. It is important for both buyers and sellers to conduct thorough due diligence and carefully assess market conditions before entering into a deal.

Concept 6: Tailored Due Diligence Services For Clients

One key aspect of conducting due diligence is ensuring that the business being acquired is financially stable and can cover its debt. The podcast mentions that with the cost of money being high and debt coverage being important, buyers need to carefully evaluate the financial health of the business they are acquiring. They need to look for businesses that are solid and can withstand economic downturns. This involves analyzing spreadsheets and considering factors such as the ability to service debt at a lower percentage of current profit or revenue.

The also highlights the importance of tailoring due diligence services to the specific needs of clients. The podcast mentions that clients can come to the service provider before even signing a Letter of Intent (LOI) and ask for guidance on building their deal team and budgeting for due diligence. This shows that the service provider aims to provide personalized advice and support to clients throughout the entire process.

Once the LOI is signed, the due diligence process begins in earnest. The explains that clients can fill out a form on the service provider's website, providing information about their transaction and the specific services they require. The service provider then asks detailed questions to gather more information and ensure that they can provide accurate proposals to the client. This step is crucial because it ensures that the service providers have all the necessary information to offer relevant and tailored services.

After the project is confirmed, the service provider matches the project parameters with their database of service providers. This is done based on factors such as the type of project and the budget. The service provider aims to match the client with the most appropriate service provider, considering factors such as cost and expertise. This ensures that the client receives proposals from service providers who are best suited to meet their specific needs.

The podcast also mentions that the proposals from service providers are relatively simple, consisting of background information, relevant experience, proposed deliverables, timeline, and estimated fees. The client is then presented with a selection of proposals and has the opportunity to ask questions and seek clarification. The service provider aims to be impartial but is available to provide additional information if requested.

Concept 7: Financial Due Diligence Costs Vary

One of the key points discussed in the podcast is the variation in costs for financial due diligence. The speaker explains that the price points for financial due diligence services depend on the specific needs of the client and the complexity of the transaction. They mention different levels of financial due diligence, ranging from basic financial analysis to more comprehensive assessments.

For smaller businesses with simpler financials, such as those with a two to three million dollar purchase price and basic bookkeeping, the cost of financial due diligence can be between two and five thousand dollars. This level of analysis involves checking for any discrepancies or red flags in the financial statements and tax returns.

On the other hand, for larger transactions or businesses with more complex financials, the cost of financial due diligence can range from six to 25 thousand dollars. This includes services such as a light scope or full scope quality of earnings analysis, data book preparation, and PDF presentations. The speakers also mention that code reviews and background checks have their own separate cost ranges.

It is important to note that these cost ranges are not fixed and can vary depending on the individual deal and the service provider. Roman emphasizes that the beauty of their marketplace is the availability of both domestic and overseas service providers. For clients who only require basic number crunching and do not need extensive insights, outsourcing to overseas providers can be a cost-effective option.

The podcast also touches upon the importance of conducting financial due diligence before finalizing a transaction. The speaker shares a story about a potential buyer who wanted to acquire an Eastern European grocery store in New York. However, upon further analysis, it was discovered that the business had off-the-books payments and potential legal issues. This example highlights the significance of conducting thorough due diligence to uncover any hidden risks or problems that could impact the success of the acquisition.

In conclusion, the podcast emphasizes that financial due diligence costs vary depending on the specific needs of the client and the complexity of the transaction. It is crucial for businesses to invest in tailored due diligence services to ensure that they have accurate and relevant information to make informed decisions and mitigate risks. By understanding the individual deal and working with experienced service providers, businesses can navigate the due diligence process effectively and increase the chances of a successful acquisition.

Concept 8: DueDilio Offers Business Acquisition Support

DueDilio offers business acquisition support through its newsletter and consulting services. The podcast highlights the importance of due diligence in the acquisition process and how DueDilio can assist businesses in this aspect.

One of the key services provided by DueDilio is its newsletter, called "The Business Acquirer," which is released twice a week. The Tuesday newsletter focuses on highlighting interesting deals found on broker websites. It provides high-level analysis, including what the author likes and dislikes about the deals, as well as some diligence questions and growth levers to consider. This newsletter serves as a valuable resource for those who are just starting out in the acquisition process, providing them with insights and information on potential deals.

In addition to the newsletter, DueDilio also offers consulting services to help businesses with their acquisitions. The company welcomes inquiries from individuals who are looking for guidance and support, even if they are new to the process. Whether it's providing suggestions for diligence questions or estimating the cost of the due diligence process, DueDilio aims to assist clients in making informed decisions.

The founder of DueDilio, Roman, has a service mindset and enjoys working with clients who are passionate about taking over businesses. He finds inspiration in helping individuals transition from corporate jobs or MBA programs into the world of business acquisition. Roman believes in being part of a supportive community and offering value to others. He sees opportunities to help people and contribute to the growing ecosystem of business acquisition.

DueDilio's services extend beyond the domestic market, as they also handle international projects, primarily in English-speaking countries. They have experience in finding cybersecurity consultants with specific language requirements, such as German-speaking consultants. This demonstrates DueDilio's ability to tackle unique and challenging projects, catering to the diverse needs of its clients.

Overall, DueDilio aims to be a valuable resource for businesses in the acquisition process. The company's newsletter and consulting services provide guidance, insights, and support to individuals looking to acquire businesses. By subscribing to the newsletter or reaching out to DueDilio for assistance, businesses can benefit from the expertise and experience of the team. DueDilio's focus on community, value, and helping others makes it a reliable partner in the business acquisition journey.

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