Quick answer: Due diligence on a Singapore business means checking its financial statements, bank records and tax filings, ACRA company records, lease, licences, staff and key contracts, and confirming there are no hidden debts or disputes before you sign.
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.
Related reading
- How to value a Singapore F&B business — 5 metrics buyers actually look at
- Selling your Singapore SME — a founder’s playbook
- Buying a Singapore ecommerce business — 5 things to verify before signing
Frequently asked questions
What is business due diligence in Singapore?
Systematic verification of a target business’s financial, legal, operational, and regulatory position before closing an acquisition. Purpose: uncover risks not disclosed in the listing and confirm the seller’s claims.
How long does business due diligence take in Singapore?
Typical timeline: 4-8 weeks for SG SME deals. Simple owner-operated businesses can be done in 2-3 weeks. Complex multi-entity or regulated businesses (medical, financial) can take 12+ weeks.
How much does business due diligence cost in Singapore?
Professional support ranges SGD 5k-15k for typical SME deals; SGD 20k-50k for larger or complex transactions. DIY due diligence is possible for smaller deals if the buyer has financial literacy.
Do I need a lawyer for business due diligence?
Strongly recommended for legal review: contracts, licences, employment terms, IP, litigation history. Accounting review is separately valuable for financial verification. Combined cost SGD 8-20k for typical deals.
What are the biggest red flags in due diligence?
Top red flags: undisclosed related-party transactions, revenue that doesn’t reconcile to bank deposits, missing licences or regulatory violations, tax arrears, pending litigation, and staff contracts without proper non-competes.