Buyer Due Diligence Guide

A comprehensive checklist to evaluate businesses before acquisition

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1. Financial Review

Start with a thorough financial analysis. Request 3 years of financial statements including profit & loss, balance sheets, and cash flow statements.

  • •Verify revenue trends - Look for consistent growth or stability
  • •Analyze profitability margins (Gross, Net, EBITDA/SDE)
  • •Check for unusual one-time expenses or income
  • •Understand working capital requirements

2. Legal & Compliance

Verify all legal aspects to avoid future liabilities. Engage a lawyer familiar with GCC business laws.

  • •Review all contracts - customers, suppliers, employees, leases
  • •Verify business licenses and permits are current and transferable
  • •Check for any pending litigation or disputes
  • •Verify intellectual property ownership (trademarks, patents, domains)

3. Operational Review

Understand how the business actually operates day-to-day.

  • •Meet key employees and assess retention risk
  • •Review customer concentration - What % comes from top 10 customers?
  • •Analyze supplier dependencies and relationships
  • •Evaluate technology systems and infrastructure

Common Red Flags to Watch For

  • ⚠Declining Revenue: Consistent downward trend in sales
  • ⚠Customer Concentration: Over 30% revenue from single customer
  • ⚠Owner Dependency: Business cannot run without current owner
  • ⚠Legal Issues: Pending lawsuits or regulatory problems
  • ⚠Rushed Sale: Seller pressure to close quickly without proper due diligence

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