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Due diligence is an investigative process that you may want to carry out if you are interested in buying a major asset, such as a business, land and buildings or a section intending to build a house or building on it.
The due diligence process lets you gather as much information as you can, from as many sources as you can, about an asset to help you make an informed decision about whether to proceed with your purchase. Usually your lawyer and accountant would be involved in your due diligence enquiries to help you understand and assess the information that is available.
The purpose of the enquiries depend upon the transaction but generally these include:
·making sure you are actually getting what you think you are buying
·assessing that the purchase price is fair and reasonable
·evaluating the commercial potential of what you are buying
·making sure there is nothing hidden behind the scenes particularly in relation to potential liabilities and financial matters
Every transaction is different but some of the types of information that are commonly reviewed include Records of Title, leases, LIM reports, financial accounts, employment arrangements, plant and stock, health and safety matters, distribution and supply agreements with main suppliers and customers, insurance, personal property securities register results and building contracts.
It is important that the due diligence condition in your agreement is worded correctly so that all options are open to you depending upon what you learn during the due diligence process.
At Ward Adams Bryan-Lamb we work with you to determine what information you may and help you to review the information as you receive it.
Contact us through our website or on (03) 218 2833 to discuss whether due diligence is something you should be considering before your next purchase.