Some thoughts about DD and where people get it wrong

Treating due diligence like a tick-the-box task is a mistake. Yes, there’s a DD list with contracts, tax returns, financial statements, leases, etc. But DD isn’t about collecting documents and confirming "complete". I think of due diligence as answering ONE question: what do I need to know in order to buy this business? The DD list informs that answer but doesn’t determine it. Example: the DD list says "obtain commercial leases". The company has one lease. You review it. Base rent, additional rent, term, renewal option, assignment requirements, and a bunch of other terms. Is DD on the lease done? No. Absolutely not. Some additional questions to consider: Is the landlord a pain to deal with? You’ll be dealing with them for years so that relationship matters. Does the space make sense for the business today and moving forward? If not, you need a plan to exit. What’s happening in the surrounding area? Upcoming construction, zoning changes or new neighbours can completely change the utility of the space. The point is that documents give you information but thinking and judgment connect the dots in order to arrive at a reasoned decision about whether to proceed or not. It's not a checklist exercise.