Most articles about business due diligence focus on the numbers — and the numbers do matter. But many of the most damaging surprises after a Sydney SME purchase have nothing to do with the financial statements. They sit in the commercial relationships, the legal contracts, the operational systems, and the regulatory standing of the business. Buyers who pass a clean financial review can still walk into a transferability problem the previous owner was never going to mention.

This checklist from Trinity Accounting Practice covers the commercial, legal and operational layer of business due diligence — the questions to ask once the financial review is well underway, and the documents to request before signing the contract.

Why commercial due diligence is a separate exercise

Financial due diligence verifies the numbers. Commercial due diligence verifies the business behind the numbers. A business can have credible historical earnings and still be a poor purchase if the customer relationships are personal to the seller, the lease will not be renewed, the major supplier has just been acquired by the buyer’s competitor, or the licence the business operates under does not transfer with the sale.

These issues do not show up in a profit and loss statement. They show up in conversations, contract reviews, regulatory searches and site visits. The buyer who skips them is buying half the picture.

Commercial due diligence — the customer side

The point of this section is to test how durable the revenue is, independent of the previous owner. Areas to cover:

Customer concentration. Top 10 customers by revenue across the past three years. Calculate the percentage. Anything over 15% for a single client warrants a specific transferability plan.
Contract status. Which customers are on written agreements with assignment clauses, which are on handshake terms, which are on month-to-month renewals.
Length and stickiness of relationships. A list of every top-20 customer with first-purchase date. Long-standing customers with high switching costs are worth more than equal-revenue customers acquired in the past 12 months.
Pipeline and forward bookings. Where the business has any kind of forward visibility — contracts, recurring services, scheduled work — the pipeline should be reviewed independently.
Reasons for any recent customer losses. Quietly ask the question. The answer is informative.

Supplier and operational due diligence

Top suppliers and pricing. What proportion of cost of goods sold sits with the top three suppliers? Are pricing arrangements personal to the owner?
Exclusive distribution or agency agreements. If the business holds an exclusive territory, the question is whether the agreement transfers and on what terms.
Inventory state. Aged stock, obsolete lines, returns provisions. A balance sheet figure does not tell you whether the inventory is saleable.
Equipment, plant and IT. Asset register reviewed against physical site walk-through. Software licences confirmed as assignable.
Lease and premises. Lease term, renewal options, make-good provisions, rent review mechanism. A favourable lease that does not transfer is a value the buyer does not actually inherit.

Legal and regulatory due diligence

Entity searches. ASIC company search, ownership confirmation, director history, PPSR (Personal Property Securities Register) search for any security interests over business assets.
Licences and registrations. Industry-specific authorisations — builder’s licence, liquor licence, NDIS provider registration, AFSL or credit licence, food safety, environmental approvals. Many do not transfer automatically. Some require a 90-day application by the new owner.
Intellectual property. Trade marks, business names, domain names, copyright in proprietary materials, customer databases. Verify ownership sits in the entity being sold, not the previous owner personally.
Outstanding disputes. Court searches, ATO disputes, payroll tax assessments, customer or supplier disputes, employee grievances.
Compliance history. Workplace health and safety incidents, environmental notices, regulator interactions.

Employment and people due diligence

Employee list with roles, awards, employment type and start dates. Used to calculate accrued entitlements at settlement.
Award and enterprise agreement coverage. Confirm classifications are correct. Underpayments are the new owner’s problem after settlement.
Superannuation guarantee status. Confirm SG is paid quarterly with no arrears. Unpaid SG attracts the Super Guarantee Charge and is non-deductible.
Key person dependencies. Which staff hold the relationships, the technical knowledge, or the regulatory tickets. What is the retention plan for each.
Restraint of trade arrangements. Does the vendor sign a meaningful non-compete? Does it survive the warranties period?

Systems, data and IT due diligence

This area is increasingly important for any business with a digital component. Areas to test:

What systems run the business — accounting (Xero, MYOB, QuickBooks), CRM, point of sale, e-commerce, scheduling, document management
Whether logins and ownership of all systems will transfer at settlement
Customer data — what is held, where it sits, and whether the transfer is compliant with the Australian Privacy Principles
Domain names, social media accounts, Google Business Profile, online reviews — who owns them, are they part of the sale, are credentials documented
Cyber security posture and any history of incidents

Site visit and operational immersion

No checklist substitutes for time on site. Spend a day in the business, ideally during a busy period. Observe how decisions are made, how staff interact, what queue forms at the owner’s desk, and what does not get done if the owner is unavailable. The pattern you observe is the pattern the new owner will inherit.

The full commercial due diligence checklist

Customer concentration calculated and risk-rated
Top 20 customers’ contract status and assignability confirmed
Top 5 supplier arrangements reviewed; transferability confirmed
Lease term, renewal and transfer provisions confirmed
Inventory aged and physically verified
ASIC and PPSR searches completed
Industry licences and regulatory approvals confirmed transferable
Intellectual property ownership in the selling entity verified
Outstanding disputes, ATO matters and compliance history reviewed
Employment census, award compliance and SG status confirmed
Key person retention and restraint arrangements drafted
Systems, data and digital asset transfer mapped and documented
Site visit completed during normal operating period

A Trinity insight from 22 years in practice

In our experience working with Sydney SME buyers since 2003, the issue that derails the most acquisitions in the first year is not a financial overstatement — it is a transferability problem the buyer assumed had been handled. The licence that needed a 90-day re-application. The lease the landlord chose not to assign on the same terms. The two largest customers whose accounts walked out with the previous owner. The buyers who avoid these outcomes are the ones who treat commercial due diligence as equal in weight to financial due diligence, not an afterthought to it.

What this means for you

If your acquisition is in a regulated industry: licence transferability is the single highest-priority item. Confirm it before anything else.
If the business is owner-operated: the commercial review matters more than the financial one. The numbers describe a business that may not exist after the owner leaves.
If you are buying via a share sale: entity searches and historical liabilities matter more. You inherit the history as well as the assets.
If the business depends on a small number of suppliers or customers: the concentration should be priced into the offer, not assumed away.

How Trinity can help

Trinity Accounting Practice runs scoped commercial and financial due diligence engagements for Sydney SME buyers — coordinated with the buyer’s legal adviser, finance broker and corporate adviser. We work through the checklist above against the specific risk profile of the transaction, quantify the dollar impact of issues identified, and translate them into the contract conditions, warranties and price adjustments that protect the buyer at settlement and afterwards.

Book a due diligence planning conversation with the Trinity team →

General advice only. This article contains general information current as at May 2026 and does not constitute tax, financial or legal advice. It does not take into account your personal circumstances, objectives or needs. Before acting on any information in this article, you should consider its appropriateness to your situation and seek professional advice from Trinity Accounting Practice or another qualified adviser. Liability limited by a scheme approved under Professional Standards Legislation.