Due diligence tests what a buyer has been told, what the business owns and owes, how it operates, and what risks or obligations may transfer. The seller's objective is accuracy and controlled transparency, not presenting a business with no risks.
Use this checklist after the sale-readiness guide and alongside the NZ business sale process. For valuation concepts, see how business valuation works.
Set up the process before collecting documents
- appoint a seller-side diligence owner and adviser contacts
- define the likely transaction perimeter and legal entities
- create a request tracker with owner, status, source, review, and disclosure stage
- create an issue register for known gaps, remediation, advice, and proposed disclosure
- agree file naming, version control, approval, and retention rules
- separate original records from working copies and seller explanations
- record who receives access, when, and for what purpose
Use staged disclosure and access control
A confidentiality agreement does not make every disclosure appropriate. The Office of the Privacy Commissioner explains that Privacy Principle 11 generally limits disclosure of personal information to the purpose for which it was collected, a directly related purpose, authorisation, or another permitted basis.
Work with advisers to stage information according to buyer credibility and process need:
- Initial fit: aggregated, non-identifying information sufficient to assess interest.
- Qualified buyer: controlled information after identity, funding, conflicts, and confidentiality are assessed.
- Preferred buyer: deeper diligence under role-based access, redaction, download controls, and an access log.
- Pre-settlement: information needed for consents, employee steps, completion, and handover, subject to law and advice.
Consider anonymising customer and employee data, restricting highly sensitive folders, watermarking exports, disabling unnecessary downloads, and withdrawing access promptly when a party leaves the process.
1. Corporate and ownership
- company and entity details, ownership, and group structure
- constitution, shareholder agreements, options, and other ownership rights
- director, shareholder, and material governance records
- related entities, trusts, partnerships, and related-party arrangements
- security interests, guarantees, authorities, and powers of attorney
- previous acquisitions, disposals, restructures, or capital changes relevant to ownership
2. Financial and tax
- historical financial statements and current management accounts
- bank, debt, shareholder-loan, and finance records
- aged receivables, payables, bad debts, and provisions
- inventory records, ageing, counts, and write-down policy
- working-capital history, seasonality, and unusual movements
- asset register, depreciation, leases, and capital expenditure
- budgets, forecasts, assumptions, and prior forecast accuracy
- income-tax, GST, payroll, and other relevant filings and correspondence
- support for owner, related-party, one-off, and non-operating adjustments
- known audits, disputes, exposures, losses, credits, or registration issues
Inland Revenue states that asset and share sales have different tax consequences. In an asset sale, price allocation between asset classes generally affects both parties. Do not finalise structure or allocation without tax and legal advice.
Use the NZ asset-sale versus share-sale guide to identify structure-specific diligence, consent, employee, and allocation questions.
3. Commercial and customers
- material customer contracts, terms, renewals, and termination rights
- revenue and margin by customer, product, service, location, or channel
- customer concentration, retention, churn, disputes, credits, and complaints
- pipeline, backlog, tender, and forecast support
- pricing authorities, discounts, rebates, warranties, and service obligations
- marketing claims, standard terms, and customer data practices
- change-of-control, assignment, consent, and notification provisions
4. Suppliers and operations
- material supplier, agency, distribution, exclusivity, and subcontractor agreements
- single-source dependencies, lead times, minimum orders, rebates, and termination rights
- operating procedures, quality systems, capacity, and key-person dependencies
- business continuity, disaster recovery, and critical incident plans
- maintenance, calibration, inspection, warranty, and service records
- environmental, waste, hazardous-substance, and site obligations where relevant
5. Employees and contractors
- organisation chart, roles, reporting lines, and vacancies
- employment agreements and employee-protection provisions
- remuneration, incentives, hours, leave, and service dates
- contractor agreements and classification
- collective agreements, consultation, disputes, claims, and investigations
- work visas and right-to-work records where applicable
- key-person dependencies, succession, retention risk, and lawful transition options
- training, qualifications, licences, and professional development
Employment New Zealand explains that an asset sale can involve technical redundancy and offers from a new employer, while a share sale generally does not change the employing entity. Specified employees can have additional protections. Review the NZ employee implications guide and obtain employment-law advice before sharing personal data or communicating proposed outcomes.
6. Health and safety
- health and safety governance, policies, risk registers, and worker engagement
- incidents, near misses, notifiable events, investigations, and corrective actions
- training, competencies, permits, personal protective equipment, and supervision
- contractor management and overlapping-duty arrangements
- regulator notices, correspondence, prosecutions, enforceable undertakings, or claims
- site, machinery, vehicle, hazardous-substance, and emergency controls
7. Property and physical assets
- property titles, leases, licences to occupy, and landlord correspondence
- rent reviews, renewals, assignments, guarantees, and change-of-control terms
- resource consents, building records, seismic, contamination, and site matters where relevant
- asset ownership, serial numbers, location, condition, and maintenance
- finance leases, hire purchase, security interests, and third-party assets
- replacement plans, deferred expenditure, surplus assets, and excluded assets
8. Technology, privacy, and cybersecurity
- systems inventory, owners, hosting, integrations, and critical dependencies
- software licences, subscriptions, source code, and change-of-control terms
- access controls, privileged accounts, backups, recovery tests, and patching
- security policies, incidents, investigations, notifications, and remediation
- personal-information inventory, collection purposes, permissions, retention, and disposal
- privacy statements, requests, complaints, processors, and overseas disclosures
- planned redaction, anonymisation, and lawful basis for diligence disclosure
9. Intellectual property
- trade marks, patents, designs, domains, copyright, know-how, and trade secrets
- registration, ownership, renewal, territorial coverage, and licences
- employee and contractor intellectual-property assignments
- third-party content, open-source software, brand permissions, and restrictions
- infringement allegations, disputes, coexistence, or settlement agreements
10. Insurance, disputes, and liabilities
- current and historical policies, limits, exclusions, and deductibles
- claims history, open notifications, declined claims, and insurer correspondence
- litigation, complaints, investigations, settlements, and threatened claims
- warranties, guarantees, indemnities, product liability, and recalls
- provisions, contingent liabilities, and obligations not recorded in ordinary accounts
11. Regulatory and industry-specific
- licences, permits, registrations, approvals, and responsible persons
- renewal dates, transfer or new-application requirements, and regulator correspondence
- audit, inspection, rating, accreditation, and remediation records
- qualified-person coverage and effect of the owner's departure
- industry codes, standards, reporting, and record-keeping obligations
- known breaches, notices, undertakings, restrictions, or pending changes
12. Transaction-specific information
- proposed asset or share perimeter and excluded items
- cash, debt, working-capital, and completion-adjustment information
- third-party consents, releases, approvals, and licence actions
- seller transition, consulting, restraints, vendor finance, or rollover equity, supported by the owner-transition plan
- disclosure schedules, warranties, indemnities, escrow, and insurance
- completion steps, handover, filings, and post-settlement obligations
Maintain a seller-side issue register
| Field | Purpose |
|---|---|
| Issue | State the fact without minimising or speculating. |
| Evidence | Link the source documents and affected period or entity. |
| Impact | Record financial, operational, legal, employee, regulatory, or timing implications for adviser review. |
| Action | Correct, reconcile, obtain advice, disclose, or monitor. |
| Owner and status | Assign responsibility and preserve an audit trail. |
| Disclosure stage | Control when, how, and to whom the issue is disclosed. |
Do not alter, backdate, or conceal records. Correct errors transparently, preserve originals, document the explanation, and obtain advice on material disclosure.