Due diligence is where most Singapore business acquisitions succeed or fail. Not at the negotiation table, not at closing — during the 4 to 8 weeks when you should be verifying every claim the seller has made and every assumption you have brought.
Here is a working checklist for buyers of Singapore SMEs, organised in the order you should attack it.
Phase 1 — Financial due diligence (weeks 1-2)
- 24 months of monthly P&L (audited if available; management accounts otherwise)
- Full balance sheet as of the most recent month-end
- Bank statements matching the monthly P&L
- Reconciliation of any cash-based revenue
- List of all one-off items (revenue AND costs) to normalise EBITDA
- All owner-personal expenses running through the business, itemised
- 3-year revenue and gross margin trend by product/service line
- Customer concentration: what percentage of revenue comes from top 5 customers?
Phase 2 — Legal and structural (weeks 2-3)
- ACRA business profile (recent)
- Company constitution and shareholders’ agreement
- All ongoing contracts: leases, supplier, customer, employment, IT/software
- Ownership of intellectual property (trademarks, domains, source code)
- Any pending or historical litigation
- Any outstanding loans or personal guarantees by the current owner
- PDPA compliance and data-handling documentation
- Regulatory licences relevant to the sector (MOE, SFA, MOH, MAS, IMDA etc.)
Phase 3 — Operational (weeks 3-5)
- Organisational chart and all employment contracts
- Key-employee dependency: which 2-3 staff, if they left, would materially damage the business?
- Are these key employees willing to stay 6-12 months post-transaction? (Written commitment)
- Standard operating procedures — do they exist in writing or only in the founder’s head?
- Supplier list with contract terms, exclusivity, and any personal-name relationships
- Software / IT stack — subscription cost, contract length, ownership
- Insurance policies and expiries
Phase 4 — Commercial (weeks 4-6)
- Verify customer testimonials by contacting 3-5 customers directly (with seller’s permission)
- Sample recent invoices to confirm actual customer names and payment history
- Check online reviews (Google, Facebook, sector-specific platforms) for tone and trend
- Understand competitor landscape and the seller’s honest view of positioning
- Site visit — spend at least 4 hours physically at the business observing operations
Phase 5 — Tax and transaction structure (weeks 5-7)
- 3 years of corporate income tax returns (IRAS)
- GST compliance history (if registered)
- Decide structure: share sale vs asset sale (significantly different tax treatment)
- Any assumed liabilities that need to be excluded from the sale
- Escrow or holdback arrangement for post-closing indemnity
Red flags to watch
- Seller cannot produce basic financials within 3-5 business days of request
- Numbers presented in a summary differ from underlying source data
- Excessive reliance on one customer, one supplier, or one employee
- Recent decline in revenue that the seller has no clear explanation for
- Seller pressuring you to skip steps or “trust them” on specific items
- Refusal to allow customer or supplier reference calls
Where to start
Ready to start your search? Browse Singapore businesses currently for sale on BizSales.sg.
Reviewing a specific target and want a second opinion on the due diligence findings? Email admin@bizsales.sg. No fee, no obligation.