Buying a business: due diligence checklist

01 /

Start with what you are buying

Clarify whether the proposal concerns shares or business assets and ask your lawyer what that means for the transaction. List the people, contracts, systems and assets the business needs to operate. Agree how confidential information will be shared and who is responsible for each line of enquiry. A checklist is a starting point; the investigation must fit the business.

02 /

Test the commercial picture

Compare historical financial statements with current trading, cash receipts and the forecast assumptions. Ask how much revenue relies on particular customers and whether those relationships will continue after a sale. Explore stock quality, overdue debt, supplier dependence and the owner's involvement. Request evidence for explanations that materially affect the case for buying.

03 /

Turn findings into decisions

Keep an issue log with the question, evidence received, unresolved risk and person responsible. A concern may require more investigation, a revised commercial assumption or a discussion with legal advisers about contractual protection. Record what must be resolved before proceeding. Do not treat a folder of documents or a verbal reassurance as a completed review.

Use this in your business

A buyer's issue log

Financial: what supports reported earnings and future cash generation?
Commercial: which customers or suppliers could change their behaviour after the sale?
Operational: who holds critical knowledge and what must transfer?
Legal: which contracts, consents or rights need specialist review?
Decision: what evidence would make you proceed, renegotiate or stop?

Illustrative example

What this could look like

A buyer sees strong sales but slow cash collection. The next step is to compare debtor ageing, disputed invoices and actual receipts. That finding belongs in the funding and working-capital discussion as well as the price discussion. Buying at an attractive price does not remove a cash timing problem.

Your next move

Bring the decision into focus.

Pivot Point's team describes buyer and seller due diligence work. Start with the target business, proposed transaction and the questions you need answered before committing.

Start a conversation Meet the advisory team

This guide is general preparation information. Advice on legal, tax and financial consequences needs to reflect your circumstances.