What is "Due Diligence"

The signing of the Sale and Purchase Agreement does not mean the business is sold. The buyer will want to verify the information supplied and review any additional information not previously made available due to commercial sensitivity. The length of the due diligence process a buyer requests will often depend on the complexity of the business.
A buyer can terminate an agreement for a number of reasons during the due diligence process, but this is less likely to occur if the Information Memorandum is explicit and accurate.

“The time allowed for due diligence will be detailed in the agreement and is normally 5 to 15 working days.”

Due Diligence
• Products lists
• Customer lists
• Supplier lists
• Plant and equipment lists
• Plant or equipment leases
• Building Leases
• Supply agreements
• Distribution agreements
• Copyright or licence agreements
• Any pending legal actions
• Employment agreements

• Profit and loss accounts – three plus years
• Year to date sales figures
• GST returns
• Aged debtors and creditors
• Staffing and payroll
• Stock values and quantities
• Work in progress estimates
• Budgets and forecasts