The purpose of due diligence is to confirm to a potential business buyer that the purchase is a sensible decision and the information being supplied is of a true nature.

This process involves an intense, comprehensive investigation and examination of the affairs of the business being purchased.

The scope of due diligence includes the following:

• Determines the soundness of a business as a going concern.
• Determines the current and potential legal problems in relation to contractual issues.
• Determines the accuracy and validity of the financial statements and the existence and valuation of assets and tax issues.