Freehold Business Due Diligence Checklist

The Business

• —Operational effectiveness — what's working well, and where could improvements be made?
• —Business reputation — what's important to the business's customers?
• —Income & expenditure — do the figures reflect how the business really performs?
• —Outstanding liabilities — are there any obligations that aren't immediately obvious?
• —Asking price — is the price right?
• —Owner dependency — what's the impact on the business when the seller leaves?
• —Customer base — are customers loyal to the business, or the owner?
• —Growth potential — can you see opportunities to grow the business?

For the ownership and funding overview before these checks, read Buying a Freehold Business.

To build your completion budget alongside this checklist, read Costs of buying a freehold business.

For Customer-Facing Businesses

• —Premises — do they create the right first impression?
• —Fixtures & fittings — would they benefit from updating?
• —Parking & access — if it's a destination business, is it easy for customers to park?
• —Supplier relationships — are key supplier relationships likely to continue after the sale?
• —Competition — how does the business compare with others nearby?

The People

• —Employees — will the team stay after the sale?
• —Key personnel — could the business operate without them?
• —Skills & experience — does the business rely on specialist knowledge or expertise?
• —Employment obligations — what responsibilities will you be taking on?

The Property

Freehold business properties command a significant premium over equivalent leasehold operations — the combination of business goodwill and property ownership in a market where commercial property values have remained resilient makes freehold acquisitions particularly attractive to buyers who can fund the higher entry price.

• —Building survey — have you read and understood the building survey report?
• —Business valuation report — have you read the report and understood the figures?
• —State of repair — are there any repair or maintenance issues?
• —Services — are the electrical, gas, heating, water and drainage services in place and satisfactory?
• —Planning & permitted use — does the current use fit your intended operation?
• —Parking & access — are there any existing issues affecting the premises?

The Assets

• —Equipment & machinery — how old are they, and what condition are they in?
• —Fixtures & fittings — would you need to make changes?
• —Additional investment — will you need to invest in the property or new equipment after you take ownership?

The Location

• —Location — what are the advantages and disadvantages of the location?
• —Local plan — could future development plans affect the business?
• —Planning applications — are there any planned developments that could impact trading?

For a sector-specific view of how this works in practice, see our page on Commercial Property acquisition finance and loans, including how lenders assess these deals and the areas we cover.