Buyers should always exercise a degree of caution when purchasing a business.  This involves seeking out as much information about the business as possible before entering into a purchase agreement.  In other words, buyers should exercise due diligence when purchasing a business.  Buyers should undergo this process with a professional who can help them locate and interpret key business documents.  By exercising due diligence, buyers can avoid a host of problems, ranging from legal complications to overpaying for an unviable business.  The time to exercise due diligence is generally before entering into a purchase agreement.  However, it is possible for purchase agreements to provide buyers with time to perform due diligence after the signing, and then cancel the agreement in the event that due diligence reveals serious problems.

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