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Spy Before you Buy! The Importance of Due Diligence for Potential Buyers


Due diligence is the most important step you can take when looking at buying a business or its assets. It is a process of investigation that summarises the business, its material assets, liabilities, risks, contracts and insurances.


We recommend conducting due diligence prior to entering into a contract to ensure any identified risks or issues are addressed in contract negotiations. Alternatively, the contract should be subject to completion of satisfactory due diligence by the purchaser.


Due Diligence is an important step in ensuring that a buyer is making an informed decision when it comes to purchasing a business. Due diligence often uncovers information that may not be readily available or disclosed by the seller during initial negotiations. Therefore, while due diligence can be a sunken cost in the event the transaction does not proceed, it is more often than not a key part of negotiating the purchase price.


New Era Lawyers is able to assist buyers with conduct due diligence inquiries and we will collate and assess key information about the target business and provide a buyer with a clear, concise summary of our findings. We will often liaise with a buyer’s accountants to ensure that a buyer is in the best position to make an informed decision in relation to the transaction.

Scope of Due Diligence Inquiries

The level of due diligence required depends upon the nature of the transaction, as well as time and costs. A buyer can determine the scope of the due diligence inquiries, however we would generally suggest the following areas of inquiry as a starting point:

  1.  background information on business and industry;
  2.  review of the business assets;
  3.  review of employment contracts and entitlements;
  4.  inquiries into permits and licences required to run the business;
  5.  real property and leases;
  6.  intellectual property;
  7.  review of material contracts entered into with customers, suppliers and other stakeholders;
  8.  insurance;
  9.  legal review of liabilities and other commitments;
  10.  financing arrangements, credit rating and security interests; and
  11.  litigation history of the business.


At New Era Lawyers, we have extensive experience in corporate advisory and mergers and acquisitions. Our specialist lawyers have acted on $90 million mergers for public companies but also have experience in advising small to medium enterprises on business acquisitions. If you are looking at buying a business please do not hesitate to contact our team for more information on how we can help you.


Before making a decision you should seek professional advice which takes into account your personal circumstances.


Get in touch

If you would like further information on how the new ESS regime can benefit your company or to discuss whether an ESS is suitable, get in contact via our contact us page.

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