Due Diligence Checklist

Company structure, shareholdings (including any PSC register), board composition, constitutional documents (articles of association, shareholders' agreements), and any group structure. Check for any restrictions on share transfers, pre-emption rights, or drag/tag provisions that may affect the transaction.

Statutory accounts (last 3 years), management accounts, cashflow, debtors (ageing and collectability), creditors, projections, and any contingent liabilities. Look for trends, anomalies, and one-off items. Understand the working capital cycle and any seasonal patterns.

Corporation tax, VAT, PAYE, and National Insurance position. Check for any historical tax liabilities, disputes with HMRC, or pending investigations. Verify that tax returns have been filed and paid. Tax due diligence is critical — undisclosed tax liabilities can be a significant post-completion problem.

Material contracts (customer, supplier, partnership), ongoing or threatened litigation, intellectual property (trade marks, patents, copyrights, domain names), licences and authorisations, and any regulatory issues. Review change-of-control clauses in key contracts — these may allow counterparties to terminate on a change of ownership.

Customer base (concentration, retention, pipeline), supplier relationships (dependency, alternatives, terms), market position, and competitive landscape. Understand the revenue mix — is the business overly dependent on a small number of customers or suppliers?

Premises (owned, leased, or licensed), equipment and machinery (ownership, condition, finance status), key processes, IT systems, and operational dependencies. Are there any single points of failure? Is the business dependent on key personnel, specific suppliers, or proprietary processes?

Employee list, contracts, and terms. Policies and procedures. Pension arrangements (including any deficits). Bonus and incentive schemes. Any ongoing disputes, grievances, or tribunal claims. Check for TUPE implications if the transaction involves a business transfer. Key person dependency — are there employees whose departure would significantly affect the business?

IT systems, software licences (and whether they are transferable), cybersecurity posture, and GDPR compliance. Check data processing agreements, data registers, and any history of data breaches. Technology due diligence is increasingly important — software licences may not transfer on a change of ownership, and data protection non-compliance can carry significant fines.

Title (freehold or leasehold), lease terms (remaining term, rent, break clauses, rent reviews), planning permissions and building regulations, condition surveys, and any environmental issues. If the business operates from leased premises, the lease is often a critical asset — check the remaining term and any landlord consent requirements for transfer.

Contamination, environmental permits, compliance with environmental regulations, and any historic issues. Environmental liability can attach to the property owner or occupier — even for contamination caused by previous occupants. A phase 1 environmental assessment may be appropriate depending on the property use and history.

All required licences and authorisations — are they transferable? Are there any conditions or restrictions? Check insurance coverage (is it adequate?), claims history, and any gaps in coverage. Ensure that key insurances (property, liability, professional indemnity) will continue post-completion.

Existing facilities (loans, overdrafts, asset finance), security held by existing lenders, personal guarantees given, and any inter-creditor arrangements. Understand whether existing facilities need to be repaid, refinanced, or can be assumed. Check for any restrictions on additional borrowing.

This checklist is a general framework for information and planning only. It is NOT a substitute for advice from qualified solicitors, accountants, surveyors, tax advisers, environmental consultants, or other specialists. Due diligence on a business acquisition or property purchase is a complex process that requires professional expertise. You must engage appropriate professional advisers to conduct proper due diligence on your specific transaction. Using this checklist without professional advice may result in significant risks being missed. FinanceMyCompany.co.uk is a credit broker, not a lender, and does not provide legal, tax, accounting, or surveying advice.