Client Services
What is due diligence?
Due diligence is the process by which a buyer examines the seller’s business in detail. The aim of due diligence is, firstly, to verify the information about the business which the seller has provided and, secondly, to find out if there are problems which have not been disclosed or which the buyer did not know about, such as claims against the business or assets used in the business which are not actually owned by the seller.
Due diligence is usually broken up into financial due diligence, tax and accounting due diligence and legal due diligence. Depending on the size and complexity of the business, the due diligence process can take anywhere between two weeks to a month or more to complete.
If you are selling your business, we recommend you consider preparing for a sale by undertaking vendor due diligence, with the assistance of your accountant and experienced legal advisers.
Vendor due diligence will help identify any problems or issues which need to be dealt with before you can successfully sell the business. From a buyer’s perspective, due diligence is a very important part of purchasing a business and we recommend obtaining professional legal and accounting advice if you are thinking about buying a business, to make sure that appropriate due diligence is undertaken.
Depending on the size of the business, it can be very useful to set up an electronic due diligence data room. This allows all your documents and information to be stored and accessed electronically, with safeguards to restrict access, copying and printing if necessary. We can help you set up an electronic data room if needed.