Due Diligence Reports

Due Diligence When Buying A Business

Buying a Business? Make sure you obtain a due diligence report before you buy! 

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Due diligence is the best way to assess the value of the business and the risks associated with buying it before the purchase proceeds. This will reduce your risk and safeguard your potential investment.

Safeguard your potential investment

Let the expert team at ABA assist you with your due diligence. We can tailor a package based on your requirements.

Our due diligence reports can objectively assess the financial performance and position of a business before you buy. 

What is included in our Due Diligence Reports?

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At ABA we can cover the following:

In-depth financial analysis and encompassing:

  • Checking accuracy of financial information provided for the last 3-5 years
  • Margin
  • Projections & earnings – are these realistic and achievable?
  • Assessment of the assets of the business – plant/stock/goodwill and how it is valued, including evidence of ownership
  • Forecasting
  • Location
  • Going rates
  • Verification of market demand and market conditions
  • Market share
  • Strengths, weaknesses, opportunities and threats

What other due diligence should you consider in addition to financial analysis when buying a business?

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  • Is the sale of the business as a going concern or salvage value?
  • Are there Patents and if registered, where do they apply and until when?
  • Is there Intellectual property and is it transferable?
  • What are the licensing and lease agreement terms and are they renewable?
  • What skills you can bring to the business?
  • What are the Competitive advantages the business has?

FAQ’s Regarding Due Diligence

A due diligence report essentially tests what the current owner is telling you about the business to verify that their claims are honest and correct.

A due diligence report can cover many things such as legal ownership of assets and intellectual property and therefore the owners right to sell them to you.

It can also cover financial analysis, human resources, sales and marketing and legal.

To assess the value of the business and the risks associated with buying it before the purchase proceeds, so that you can reduce your risk and safeguard your investment.

The results of the report can be used to evaluate whether or not you want to proceed with the transaction.

Items will vary depending on the type of business and deal that is being evaluated.

Below are some core items that should be considered:

  • Financial information for such as several years such as a Profit & Loss, Balance Sheet and Tax Return
  • Human Resources information on key employees and their experience
  • Assets – both tangible and intangible
  • Key trade relationships regarding customers, suppliers and partners
  • Legal matters such as contracts, licensing and permits. Also information on any historical or pending lawsuits.

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