Due diligence when buying a business

When you are considering buying a business, conducting due diligence ensures you have access to important information about the business you're buying. It's the best way for you to assess the value of a business and the risks associated with buying it.

Through the due diligence process, you thoroughly investigate all aspects of a business for sale. You look at the business's operations, financial performance, legal and tax compliance, customer contracts, intellectual property, assets and other details, often within a time period specified in a letter of intent.

You usually conduct due diligence after you and the seller have agreed in principle to a deal, but before signing a binding contract.

The information you collect during due diligence is highly sensitive and confidential. The seller might want you to sign a non-disclosure agreement before you access this information.

This guide contains potential questions you need to ask when investigating a business you are considering buying.