Due Diligence – What you need to consider

You are involved in buying a business and you want to get the deal done as quickly as possible. This should not mean that you short cut the due diligence process. Due diligence is one of the key elements when buying a business and if carried out thoroughly should avoid you uncovering some expensive problems once you have purchased the business. A non exhaustive list of matters you need to consider when carrying out due diligence is below.

  • Accounts
    • Bad debt
    • Audited Accounts?
    • Age of the accounts
  • Historical Information
    • Any Inconsistencies?
    • Profit Margins, Growth, Overheads and Working Capital
  • Financial Projections
  • Assets and Stock
    • Stock Levels
    • Legal Ownership
  • Property
    • Property Searches
    • Review of Title Documents
    • Covenants and Easements
    • Planning
    • Surveys and Valuation
    • Lease Review
    • Environmental Issues
  • Customers and Suppliers
    • Review of the Customer and Supplier database
    • Contracts ReviewÂ
    • Can Contracts be Transferred or Assigned?
    • Breakdown of Major Customers/SuppliersÂ
  • Finance Agreements
    • Hire Purchase Agreements
    • Lease Agreements for Equipment
  • Employees
    • Employment Rights
    • Liabilities
    • Redundancies
    • Introduction of New Staff
    • Employment Contracts
  • Intellectual Property
    • Protection of Confidential Information, Trade Secrets and Know How
    • Brand Protection
    • Establishing Ownership
    • Assignment of Intellectual Property
    • Licensing of Intellectual Property
  • Pension Scheme
  • Any On-going or Potential Litigation
  • Commercial Overview
    • Business Environment
    • Identify Potential Opportunities/Risks in the Market
    • Suppliers/Customers Opinions
  • Legal Steps Required

If you are buying or selling a business and require any information or assistance please feel free to contact us.

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