Due Diligence Checklist for Foreign Buyers
Investigate before you sign - financial, legal, operational review
Why Due Diligence Matters More for Foreign Buyers
30-60 Days
Typical DD period
$10K-$30K
Professional costs
100+ Items
Full investigation
Protection
Avoid costly mistakes
45-Day Due Diligence Schedule
Financial Due Diligence Checklist
Verify the business actually generates the revenue and profit the seller claims.
Federal, state, local - harder to falsify than internal statements
Monthly if available - compare to tax returns
All accounts - verify deposits match revenue
Verify assets exist and are valued correctly
What is owed to and by the business
Physical count, valuation, depreciation
Legal Due Diligence Checklist
Legal issues can derail acquisition or create liabilities that survive purchase.
Verify seller owns what they are selling
Terms, renewal options, assignment provisions
Business, professional, health - are they transferable?
Past and pending lawsuits - check court records
Major agreements, exclusivity, pricing terms
Trademarks, patents, domains - verify ownership
Transfer provisions, franchisor approval
Operational Due Diligence Checklist
Understand how the business operates day-to-day.
People
- Employee roster and org chart
- Employment agreements
- Key employee retention plans
- Payroll and benefits records
Processes
- Standard operating procedures
- Technology and software systems
- Supplier relationships
- Customer concentration analysis
Physical
- Equipment condition inspection
- Real estate status
- Inventory count
- Deferred maintenance assessment
Foreign Buyer Special Checklist
Additional factors related to your unique situation as a foreign buyer.
Meets substantial investment and job creation requirements?
Clear trail showing legitimate source of capital
Demonstrate active management for visa purposes
5-year projections showing non-marginal business
Coordinate with banks to avoid compliance holds
Form US entity in advance, optimal structure
Red Flags to Watch For
Seller Rushing Process
Pressure to close quickly often masks problems
Inconsistent Financials
Tax returns don't match P&L or bank deposits
Key Employee Departures
Critical staff leaving with owner
Declining Revenue
Fundamental problems new ownership can't fix
Customer Concentration
One customer is 25%+ of revenue
Pending Litigation
Lawsuits can be expensive and distracting
Deferred Maintenance
Run-down equipment needs capital expenditure
Reluctance to Provide Docs
Delays suggest hidden problems
Building Your Due Diligence Team
Thorough due diligence requires expertise beyond what any single professional provides.
Core Team
- Transaction Attorney - coordination, legal review
- CPA/Accountant - financial analysis, tax
- Immigration Attorney - E-2 eligibility
Specialists
- Industry Specialist - market, valuation
- Insurance Broker - coverage gaps
- Environmental (if applicable)