When buying or selling a business, financial due diligence is a given. Reviewing accounts and verifying assets is essential, but true insight comes from understanding how the business actually runs – that’s where operational due diligence makes all the difference.
The Missing Piece in Due Diligence
Financial due diligence shows what a business has done. Operational due diligence reveals how it performs now and how resilient it is for the future. It looks beyond the numbers – at people, systems, and processes – to understand how the organisation functions day to day.
What to Look For
An independent, impartial reviewer can identify both risks and opportunities that those close to the business might miss. Key areas to assess include:
- Key roles and responsibilities – avoiding single-person dependencies.
- Customer experience and service delivery quality.
- Supplier and customer agreements (SLAs) and compliance.
- Health, safety, and governance records.
- Cyber security and IT systems audit.
- Operational systems, scalability, and documentation.
Why It Matters
For buyers, operational due diligence ensures the business delivers as promised – not just financially but functionally. For sellers, it’s about foresight – uncovering and addressing issues before a buyer does. The result is a smoother transaction and stronger valuation.
Seeing the Wood for the Trees
Most owners are so focused on daily operations they stop seeing what’s right in front of them. A fresh, objective review can reveal hidden inefficiencies or untapped value. The insights gained don’t just support a successful sale or purchase – they help build a stronger, more resilient business.
“When it comes to selling or buying a business, knowledge isn’t just power – it’s profit.”