Giving Diligence Its Due

In the world of sales and acquisitions, small business owners shouldn't be like an impressionable child offered candy by a stranger -- they need to avoid the temptation to jump at tempting business confections.

Eugene Ferraro, CEO and founder of Business Controls Inc., a customized research and due diligence service, relates the story of starry-eyed investors who accepted an unusually large offer for their business without properly looking into the buyer's background.

The acquiring company -- which turned out to be made up of organized criminals -- sold off the inventory on the black market, didn't pay company bills and eventually bankrupted the business.

"[Buyers can] build great trust and sound like Harvard MBA's," says Ferraro, but that doesn't mean they will be good for the company you may have spent a lifetime building. ...