Due diligence checklist for buying a business

Record what you expect to acquire, the buyer entity and the reasons the deal works.

Gather: Deal thesis, draft term sheet and purchase scope.

Identify available records, access restrictions and the deadline for investigating.

Gather: Access plan, confidentiality terms and diligence timetable.

Distinguish asset or ownership acquisition and identify issues for legal and tax review.

Gather: Draft structure and buyer or seller entity documents.

Professional review: Have transaction counsel and a tax adviser assess structure and assumed liabilities.

Compare financial statements with tax filings, deposits and payment-processor records.

Gather: Financials, tax returns, bank and processor statements for relevant periods.

Separate repeatable earnings from one-time items and costs a new owner must bear.

Gather: Adjustment schedule, invoices and owner role or compensation detail.

Review receivables, payables, inventory, deferred revenue and financing obligations.

Gather: Aging reports, stock records, debt schedules and working-capital proposal.

Identify concentration, recurring revenue, retention and dependence on key relationships.

Gather: Revenue by customer, supplier terms and authorized retention evidence.

Include purchase funds, fees, payroll, repairs, investment and a downside case.

Gather: Funding plan, capex estimates and scenario budget.

Document lender conditions and any earnout, seller note, escrow or adjustment.

Gather: Financing terms and proposed payment or adjustment schedules.

Match included assets to condition, ownership and any financing or liens.

Gather: Asset register, inspection reports, titles and lien-search results.

Review rent, repairs, transfer consent, guarantees and remaining lease term.

Gather: Lease, expense history and landlord consent requirements.

Identify assignment, change-of-control, renewal, termination and pricing terms.

Gather: Customer, supplier, service and finance contracts with a consent matrix.

Confirm needed licenses and approvals with the issuing authority.

Gather: License register, regulator correspondence and transfer or application plan.

Check rights to branding, software, domains, content and key operating accounts.

Gather: IP records, licences, domain ownership and an authorized access-transfer plan.

Identify open or threatened claims, investigations and coverage gaps.

Gather: Claims schedule, proceedings, policies and loss history.

Review filings, notices, outstanding obligations and any required clearance.

Gather: Tax filings, agency notices and adviser-requested clearance evidence.

Professional review: Have qualified advisers assess tax, regulatory and successor-liability exposure.

Check key roles, compensation, accrued benefits and employment arrangements.

Gather: Staff roster, agreements, payroll and benefit records.

Identify key processes, equipment maintenance, capacity and reliance on the seller.

Gather: Operating procedures, maintenance logs and a site visit.

Check access control, customer-data use, software licences and incident history.

Gather: System inventory, privacy terms and security or incident records.

Define training, availability, relationship introductions and account handover.

Gather: Transition scope, milestones and authorized communication plan.

Give counsel the diligence findings and negotiate documented treatment of unresolved matters.

Gather: Issue list, disclosures and proposed warranties, indemnities or escrow.

Check consents, releases, insurance, financing and who verifies payment instructions.

Gather: Closing checklist, funds-flow statement and independently confirmed instructions.

Allocate responsibility for payroll, customers, suppliers, access and operating permissions.

Gather: Cutover plan, responsible contacts and post-close deadline calendar.