Due Diligence for Mid-Market & Lower Mid-Market Companies

Know what you are buying or selling, and protect value before the deal is signed.

In a mid-market or lower mid-market transaction, due diligence is where value is protected or lost. For businesses with annual turnover of roughly R10 million to R300 million, the review must be thorough enough to find the issues that affect price and deal certainty, and proportionate enough to fit the deal’s budget and timetable.

What our due diligence covers

  • Corporate and ownership: MOI, securities register, shareholder agreements, pre-emptive rights and the approvals the deal requires.
  • Material contracts: change-of-control, assignment, exclusivity and termination rights in key customer and supplier agreements.
  • Finance and security: loans, guarantees, suretyships, security over assets and lender consents.
  • Employment: key staff, restraints of trade, incentive schemes and section 197 transfers in going-concern sales.
  • IP and technology: ownership of brands, software and work created by founders, staff or contractors.
  • Regulatory: licences, POPIA, B-BBEE ownership and whether a Competition Commission merger filing is required.
  • Disputes: current and threatened litigation, investigations and contingent liabilities.

Legal, financial and tax

Legal due diligence runs alongside the financial and tax reviews carried out by accountants and tax advisers. We coordinate with them so that the findings feed into one view of the deal.

Share sale or asset sale?

In a share sale, the buyer takes the company with its full history. In an asset or going-concern sale, the focus shifts to which assets, contracts, employees and consents transfer, and which liabilities stay behind.

When we can help

We assist buyers, sellers and investors who:

  • Are preparing a business for sale and want to find issues before a buyer does.
  • Need a vendor due diligence review or an organised data room.
  • Are acquiring a business or a stake and need a buy-side review.
  • Want an early red-flag review before committing to full due diligence.
  • Are completing a management buy-out or shareholder exit.
  • Need findings turned into warranties, indemnities and conditions.

How the process works

From scoping to signing.

  1. Scope
    We agree the key risk areas, materiality thresholds, reporting format and timetable.
  2. Red-flag review
    We identify issues that could affect deal viability, valuation or core terms, early enough to act on them.
  3. Deep dive
    We investigate significant findings, raise follow-up requests and engage with management.
  4. Report
    You receive an executive summary, a prioritised issues register and a list of required consents.
  5. Protect the deal
    We translate findings into price adjustments, conditions, warranties, indemnities and closing actions.

For sellers, starting six to twelve months before going to market leaves time to fix issues rather than discount for them.

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What to prepare

Documents sellers should have ready.

  • CIPC documents, the MOI and securities register.
  • Shareholder agreements and key resolutions.
  • Top customer and supplier contracts.
  • Loan, guarantee and security documents.
  • Senior employment contracts and incentive schemes.
  • Leases, licences and IP registrations.
  • Details of disputes and regulator correspondence.

Common Questions

Financial due diligence examines earnings, cash flow and the quality of the numbers. Legal due diligence tests ownership, contracts, compliance, disputes and other legal exposures. Both should inform one transaction decision.
Yes. In the mid-market a phased approach is often sensible: a short red-flag review tests whether there is a deal worth pursuing before a full review is commissioned.
It depends on the scope, the quality of the data room, the complexity of the business and how quickly information requests are answered. We agree milestones when the work is scoped.
Where possible, yes. Vendor due diligence lets you fix or disclose issues on your own terms, which reduces price chips and warranty exposure once a buyer starts its review.
Yes, subject to conflict checks. We advise sellers on readiness and disclosure, and buyers and investors on acquisition risk and deal protection.

BUYING OR SELLING A BUSINESS?

We provide proportionate due diligence that protects value and keeps your transaction on track.

Read more: Business Mergers & Acquisitions · Data Privacy Due Diligence

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This page is general information and not legal advice.

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