Focus On: Due Diligence

Due Diligence

Due diligence is the detailed investigation and audit carried out by the buyer before contracts are exchanged. It allows the purchaser to fully understand the company they are acquiring and ensures there are no unexpected issues.

Once an offer is accepted, Heads of Terms are prepared. This document sets out the framework for the deal. Legal representation is typically brought in at this stage if not already involved. We work closely with respected legal firms to coordinate the process efficiently and protect your interests.

Guiding You Through the Process

For many business owners, due diligence can feel daunting. Buyers will review all aspects of the company to ensure transparency and to verify the information provided. Our role is to support you through every step, ensuring you are well-prepared and that the process runs smoothly.

We work with you to prepare a secure, cloud-based data room containing all the key information buyers need, from financials and employee contracts to legal and operational documentation. By managing this carefully, we help keep the process organised and reduce unnecessary delays.

During this stage, legal, financial and commercial due diligence is carried out in parallel. Once these investigations are complete and both sides are satisfied, the Sale and Purchase Agreement (SPA) is finalised. This is the legal contract for the sale of your shares and sets out the agreed terms of the transaction.

Types of Due Diligence

Traditionally, due diligence has focused on legal and financial matters. In recent years, commercial due diligence has also become an increasingly important part of the process.

The three areas often overlap, each providing essential insight to support a successful transaction.

1. Legal Due Diligence

Establishes the legal standing of the company and its key relationships. Typical areas include:

• Ownership and structure
• Statutory compliance
• Funding facilities and liabilities
• Contracts with customers and suppliers
• Licensing and regulatory compliance
• Intellectual property
• Employment and property matters
• Insurance

2. Financial Due Diligence

Assesses the financial health of the business, focusing on past performance and future forecasts. Common areas include:

• Accounts, systems and reporting
• Profit and loss and cash flow cycle
• Forecasts and management information
• Assets and liabilities, including property, fixed assets, debtors, working capital and cash

3. Commercial Due Diligence

Evaluates the company’s strategic position in the market. Typical areas include:

• Customer and supplier relationships
• Contractual frameworks
• Order book and pipeline
• Competitive landscape
• Market conditions and economic factors
• Product liabilities and distribution agreements

A Reassuring, Structured Approach

Due diligence can appear complex, but with experienced guidance it can be handled smoothly and efficiently. At La Salle Corporate, we take a hands-on approach throughout the process, working closely with legal and financial advisors to keep everything on track and to ensure your interests are fully protected.