Leasehold 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 Leasehold Business.

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

For Customer-Facing Businesses

• —Customer experience — would you be happy to be a customer?
• —Online reviews — what do recent customer reviews tell you?
• —Premises presentation — does the business create a good first impression?
• —Peak trading periods — when is the business busiest?
• —Repeat customers — does the business appear to benefit from repeat trade?

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

Where commercial rents are higher and lease premiums more common, the lease is frequently the most complex element of the transaction. Rent review mechanisms, service charge caps, and permitted use clauses all need careful review — preferably by a solicitor with commercial lease experience.

• —Lease — how long is the remaining lease?
• —Assignment & renewal — what are the assignment and renewal terms?
• —Lease terms — are there any landlord-imposed trading obligations or restrictions?
• —Rent review — when is the next rent review due, and what is the likely outcome?
• —State of repair — are there any outstanding repair or maintenance issues?
• —Planning & permitted use — does the current use fit your intended operation?
• —Parking & access — are there any existing issues affecting the business?

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 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 proposed developments that could impact trading?

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