Due Diligence Best Practices in M&A

Getting due diligence right

Due diligence is one of the most critical phases in any M&A transaction. It’s the process where facts are tested, assumptions are challenged, and risks are revealed. Handled well, it paves the way for a smooth transaction. Handled poorly, it can derail a deal at the final hurdle.

At Mergers.co.uk, we specialise in strategic business sales and partial exits, working with business owners and acquirers across the UK. We’ve seen firsthand how proper planning and best practice in due diligence can protect value, reduce delays, and strengthen post-deal integration.

Why due diligence matters

From the buyer’s perspective, due diligence confirms that what they’re buying is real, stable, and worth the price. From the seller’s perspective, it’s about being prepared, transparent, and in control of the narrative.

Both sides benefit from a smooth process — but it doesn’t happen by accident.

The three pillars of effective due diligence

1. Preparation before the deal

Buyers shouldn’t wait until Heads of Terms to start thinking about due diligence. Likewise, sellers who prepare early are more likely to build confidence and avoid deal fatigue later on.

2. Focus on what matters

Good due diligence is strategic — not just a data dump. It prioritises key areas such as revenue quality, customer concentration, contractual obligations, staff dependencies, and legal risks.

3. Manage the process tightly

Left unchecked, due diligence can balloon in scope and timeframe. Best-in-class deals run due diligence in structured phases, with a clear data room, milestones, and regular communication between parties.

Key areas buyers should focus on

Financial

Verify earnings, cash flow, debt, working capital trends, and forecasting assumptions. Pay close attention to any non-recurring income or discretionary costs.

Legal

Review contracts, IP ownership, liabilities, litigation, employee terms, and compliance with regulatory obligations. Identify any change-of-control clauses that could trigger issues.

Operational

Assess systems, processes, supply chain risks, and day-to-day reliance on founders or key staff. Look for scalability and areas of fragility.

Commercial

Understand the competitive position, market dynamics, customer retention, pricing power, and threats. Validate claims with external research where needed.

Tax

Ensure compliance with VAT, PAYE, corporation tax, and review past filings and open matters. Unexpected tax liabilities can derail deals.

Cultural and integration

Often overlooked but crucial. Will teams integrate? Is there shared alignment on values, leadership, and ambition?

Best practices for sellers

Get your house in order early

Organise your documents, contracts, and financials in a secure virtual data room. Fix loose ends, update expired contracts, and resolve known issues before they’re raised by the buyer.

Control the flow of information

Present documents in a logical and phased manner. Avoid overwhelming the buyer’s team — and make sure they’re not being drip-fed key information at the eleventh hour.

Be transparent and realistic

Every business has issues. Hiding them damages trust. Raise them early, explain context, and present solutions.

Keep your advisers close

Due diligence involves lawyers, accountants, and M&A advisers. Make sure your advisory team is experienced, responsive, and aligned — because delays can kill momentum.

Don’t let due diligence destroy value

Deals can fall apart at this stage — or worse, get renegotiated under pressure. The buyer suddenly wants a discount. The seller becomes defensive. Everyone loses trust.

But when both sides treat due diligence as a professional process — not a battle — it builds confidence and increases the chance of a successful close.

Building the right process with the right partner

At Mergers.co.uk, we believe due diligence isn’t just a box-ticking exercise — it’s where deals are tested and strengthened. We support our clients with clear structures, experienced guidance, and practical insight drawn from real-world transactions.

If you’re preparing to sell, part-exit, or acquire a business, we’ll help you prepare for — and manage — a professional due diligence process that protects value and relationships on both sides.

Contact Us today!