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Business due diligence Newcastle
Undertaking due diligence is a vital process to ensure your deal delivers to and beyond your expectations. Let our advisors help you, experts in business due diligence in Newcastle.
When buying a business, the vendor can tell you about their operation, but how do you know it is true?
Due diligence is a pivotal step in the process of purchasing any business to ensure any new acquisition offers real business and financial benefits. Our business advisors can help you understand the complete landscape in which the business operates and identify potential risks you may face.
Learn more about due diligence, and contact us for a due diligence assessment in Newcastle today.
What is due diligence?
Due diligence is a verification process of the information provided by the vendor and helps provide confidence in your business purchase decision. Regardless of whether you are a large, medium, or small entity, it is vital to complete due diligence checks before purchasing a business.
Partnering with our business advisory accountants to undertake your due diligence will help you determine key financial, commercial, and operational factors, identify risks, and assess the true value of the business.
We will walk you through our due diligence checklist in Newcastle, enabling you to proceed with confidence, amend the deal to mitigate risks, or recommend walking away from unsuitable deals.
What are the benefits of due diligence when buying a business?
Due diligence provides a holistic view of the business, considering the inherent value of the company, other bidder activity, potential synergies, and your capacity to fund the acquisition.
You want to acquire the business at the right price, based on a comprehensive understanding of its existing obligations, financial health, and strategic positioning.
The benefits of due diligence for the buyers are:
- An understanding of the financial viability, including revenue and earnings drivers
- Gauging the level of risk involved in the transaction and potential ways to mitigate this
- Discovering the business’s obligations, both known and unknown, and the impact on future performance and cash flows
- Unearthing any issues with the deal early to either reassess, modify and proceed, or walk away
- Determining the level of gearing that the business can withstand.
The benefits of due diligence for vendors are:
- Providing potential buyers with comfort and assurances of the deal
- Helps to reduce your own business disruption and ensure smooth transfer to new owners
- Can aid in securing a higher price for your business and/or property
- Assists in managing the timing and process of the sale.
Due diligence and deal structure
Due diligence is a dual accounting and legal process. We can recommend and work closely with lawyers to help advise on how best to structure your deal.
Our advisors will discuss with you the different ways to structure the deal, whether it be purchasing shares or the business assets, and the risks and benefits of each. If purchasing shares, the due diligence process becomes even more important as it means you inherit the history of the company and its liabilities.
We will work closely with your legal representation to help ensure your due diligence is comprehensive and complete. Contact us for expertise in business due diligence in Newcastle.
Advice for your business
The top recommended due diligence checklist in Newcastle
When you first look at a business basic information will be supplied. However, in some cases the owner of the business will be reluctant to reveal too much about the business until an offer is made.
Many aspects in the operation of a business are commercially sensitive and confidential; thus, a business owner would be prudent in withholding until there is a serious intention to purchase or conditional offer subject to due diligence.
Due diligence involves analysing all the below information to form a holistic view of the value and risk of the prospective business from an accounting and legal perspective.
Contact us for a due diligence risk assessment in Newcastle. We have extensive experience in the area and can provide reliable recommendations ahead of your purchase.
FINANCIALS
Three to five years of tax returns, BAS, records of account receivables and payable, balance sheets, profit and loss records, cash flow statements and sales records. How is the business performing? What are its outgoings? Does the business have any outstanding debts?
TAX
Calculating the tax on the transaction, any stump duty and GST implications.
LEASE
How long is the lease? Will the landlord agree to the transfer of the lease into your name? Will you have to negotiate a new lease? How much is the rent and other associated outgoings?
STAFF
How many employees? And what are the current employee’s outstanding entitlements? Understanding any key and non-essential employees.
LICENSES & PERMITS
Does the business have all correct and up-to-date licences and permits required to run the business?
LEGAL DOCUMENTS
Are there outstanding agreements between the seller and suppliers?
ASSETS
What assets does the business have? Does it have any intellectual property?
INVENTORY
How is the inventory managed and stored? Will inventory on hand be included in the purchase price? Slow moving stock or provisions required.
STATUS OF PLANT, EQUIPMENT & FIXTURES
What kind of equipment and machinery does the business own? Are they in good working order and licenced?
ROI
What will be your return on investment?
PRICE
Is the business within your budget and can you fund the purchase?
Advice for your business
FAQs about business due diligence
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We are one of the leading accounting firms in Newcastle. Schedule a consultation to see how we can help you and/or your business.
Contact us for a due diligence risk assessment in Newcastle
The collation of the above documentation can be a timely process and the analysis of it requires a high level of business and legal acumen and experience. It is recommended you engage specialist business advisory services to help guide you in your purchase decision.
We regularly work with several lawyers specialising in business due diligence in Newcastle, and are happy to make recommendations.
If you are looking at purchasing a business contact our business advisors. Providing peace of mind for you and your business.
