Anyone who has ever bought or sold a business, or has even thought about it, has heard the
term “due diligence.” Most people I meet don’t know what it is or, if they do, severely
underestimate what it means.

It is best to compare it to a more familiar term – when you buy a house, you typically make an
offer “subject to” conditions such as financing and a home inspection. Due diligence is the
business equivalent to the home inspection – is the foundation strong? (legal documentation) –
Will the roof need to be replaced in a year? (Financial issues). Does the vendor have clear title
(debt checks). A checklist is below, but it should not be considered complete – always consult a
professional (lawyer, accountant, business consultant) to ensure you have covered all the

 Corporate structure, Articles, by-laws, minute books and capitalization
 Corporate, asset, and debt searches
 Financial statements
 Government obligations (PST, GST, payroll deductions, WCB, other, other, other…)
 Operational issues – documentation of policies & procedures
 Real property review
 Insurance
 Material contracts
 Employment issues
 Litigation (past, present, potential)
 Environmental issues
 Related party transactions
 Intellectual property (patents, trademarks, other)
 Licensing issues (liquor, food, etc.)

Need more information? Call us at 204-478-7266, ext. 110. or click to download our free e-book on
buying a business.