Due diligence is checking the business properly before you commit: its finances, its legal position and how it runs. It protects you, and it builds the evidence your lender needs to approve the loan.
What it covers
- Finances: accounts, cash flow, debts, payroll, VAT and tax.
- Legal: contracts, property and leases, licences and permits, insurance, disputes and regulatory compliance.
- Operations and people: key customers and suppliers, staff and their terms, systems, and how much depends on the current owner.
What your lender will check
Lenders start with the finances: whether the profits are real, sustainable and turn into cash. On larger deals they may ask for an independent accountant's report. They also look at the deal structure and at you as the buyer.
What slows it down
- incomplete or out-of-date financial information from the seller
- surprises found late, such as tax issues or a key contract about to end
- slow responses between buyer, seller, lawyers and lender
Who does it
Your accountant and solicitor usually lead it for you. Their findings also feed into the warranties and indemnities in the sale agreement.
Last reviewed: 8 October 2026