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Graham & Sibbald: Five Tips for Dealing with Due Diligence

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Graham & Sibbald: Five Tips for Dealing with Due Diligence

Graham & Sibbald: Five Tips for Dealing with Due Diligence
March 05
09:02 2018

A growing necessity in the licensed trade, due diligence has become far more of an issue for both buyers and lenders before embarking on a purchase or leasing agreement in the hospitality and licensed trade.

There was a time when buyers would simply take a view; the business looks good, the location is right and the building appears to be in sound condition; the price would be agreed and the deal would, more often than not, sail through. However, ever since the credit crunch a decade ago, buyers have increasingly demanded more in terms of documents, paperwork, surveys and reports before committing to a deal.

Graham & Sibbald’s Pete Seymour introduces a quick-reference guide to essential due diligence that should be undertaken in advance of any transaction:

  1. Prepare properly: A reputable agent will provide a list of what is required, including: Annual P&L accounts; VAT returns; Stocktaking’ reports; Barrelage statistics; A detailed staff list; The PAT register; The latest Electrical Installation Condition Report (EICR); the Scottish Energy Performance Certificate (EPC); the Asbestos Register and several others. Dealing with them now, at the start of the process, will ensure minimal delays when these documents are requested by the purchaser.
  2. Honest and transparency are key: It is better to show poor profit and loss accounts, where a buyer might see scope for improvement, than no accounts at all. At Graham & Sibbald, we maintain it is better that a business is open rather than shut, and so showing even a loss-making enterprise is better than showing no business. Buyers tend to fear the unknown more than they fear something they can understand and perhaps change.
  3. Sort out any poor record keeping: Generally, buyers will shy away from poor record-keeping. While there are obvious limits to what can be achieved in a short period of time, maintaining the focus on resolving what you can – and improving the levels of information available – will only help the process. The more a seller resolves in advance, the easier it will be to demand a higher price or be more bullish about the price we demand.
  4. Produce material in a timely manner: It is difficult to obtain 100% of the information a buyer may demand. However, if a demand comes in that is normal, expected or justified, it is best to react as quickly as possible and set a clear time frame for the delivery of the documents. Buyers are suspicious of delays and may start to question the validity of the documents once produced.
  5. Ensure your agent has ready access to the relevant information: Vendors increasingly pass information directly to the buyer. However, this can cause problems and delays further down the line if solicitors later refer to or discuss this information that has until then been outwith the agent’s knowledge. It is therefore better to let the agent deal with sellers’ requests and to forward the information to them to distribute accordingly.

As the British Army so succinctly puts it: Prior Preparation Prevents a Piss-Poor Performance’.

Pete Seymour is Head of Licensed Trade and Leisure Agency at Graham & Sibbald. Their team of specialist chartered surveyors are currently working on a market analysis of the Scottish licensed trade market, to be released this April.  Keep an eye out here at or email to receive your copy.

For more information on this and other issues relating to commercial property sales and purchases, contact Graham & Sibbald or visit

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Catering Scotland

Catering Scotland

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