Business valuation7 min read
Thinking of buying a business? The due diligence checklist
What to ask for, and what to check, before you buy a South African small business: the numbers, the people, the contracts and the compliance.
- Updated
- 18 Oct 2026
- Facts checked
- 18 Oct 2026
- Sources
- 2 listed
In short
If you read nothing else.
- 01
Check the seller's figures against the bank statements, not just the financial statements.
- 02
Work out what the business earns without its current owner.
- 03
Confirm tax, CIPC and Compensation Fund compliance before you sign.
In this guide4 sections +
A business can look busy and profitable and still not be worth the asking price. Due diligence is how you find out what you are actually buying. Do it before you agree a price, and before you sign anything binding.
The numbers
- Three years of financial statements, and the management accounts for the current year.
- Bank statements for the same period. Revenue in the financials should be visible in the bank.
- Normalised earnings: profit adjusted for the owner's own pay, personal expenses run through the business, and once-off items. Ask for the owner add-backs in writing and test each one.
- Customer concentration: how much revenue comes from the top three customers, and whether those relationships will stay after the sale.
- Debtors ageing: who owes the business money, how old the debts are, and how much is realistically collectable.
- Creditors and any loans, guarantees or arrangements with SARS.
The assets
- A list of vehicles, equipment and stock, with their age, condition and who owns them.
- Whether any assets are financed, leased or used as security.
- Intellectual property, website, domain and phone numbers, and whether they transfer with the business.
The people
- Employment contracts, payroll records and any disputes.
- Owner-dependency: who quotes, who holds the customer relationships, who knows how the work is done. If it is all the seller, price that risk in or agree a handover period.
- Key staff who are likely to leave when the owner does.
Contracts and compliance
- Leases, supplier agreements and customer contracts, especially change-of-ownership clauses.
- Tax compliance: ask the seller for a SARS Tax Compliance Status PIN so you can check the status yourself.
- CIPC: annual returns and beneficial ownership filings up to date.
- Compensation Fund (COIDA): registration and a current Letter of Good Standing if the business has employees.
- B-BBEE status, if the business tenders or supplies larger clients.
Sources
Sources checked 18 Oct 2026. Rules and thresholds change; confirm before you rely on them.
General information, not advice. This guide explains the general position for South African businesses. It is not tax, legal or accounting advice. For your specific situation, speak to your accountant, registered tax practitioner or attorney.