Due Diligence Before Acquiring a Business
What a buyer should look at, and why it affects the price and the contract.
Buying a business means taking on its history as well as its future, including problems that may not be visible from the outside. This article explains what due diligence covers and the questions buyers most often ask before committing to a deal.
The key points
Due diligence tests whether the business is what the seller says it is and whether the price reflects the risks. What it finds shapes the purchase price, the contract terms and sometimes whether to proceed at all.
- Corporate and ownership: confirm who owns the shares or assets, and check for restrictions, charges or shareholder disputes
- Financial and tax: review accounts, debts, cash flow and any outstanding or potential tax liabilities
- Key contracts: check customer, supplier and lease agreements for change-of-control clauses and unfavourable terms
- Employees: review contracts, key staff retention, benefits and any pending employment claims
- Regulatory and litigation: confirm licences and compliance, and identify current or threatened legal proceedings
- Technology and data: assess intellectual property ownership, cybersecurity and compliance with data protection laws
What to do next
Issues found before signing can be priced in, covered by warranties and indemnities, or resolved as conditions of the deal, while issues found afterwards are much harder to fix. Talk to us early to plan a due diligence review that fits the size and risks of your acquisition.
