Due diligence: the documents a buyer will ask you for

Why prepare this file in advance

Due diligence is the period during which the buyer checks everything it is taking over: the company, its accounts, its buildings, its leases and its commitments. Every missing document lengthens the timeline, and every grey area turns into either a lower price or a heavier guarantee in the share transfer agreement.

Preparing this file before you even meet a buyer is therefore one of the simplest ways to sell faster and on better terms.

The list below is not exhaustive: every buyer has its own, and every company its particularities.

The company

• Coordinated articles of association
• Up-to-date share register
• Extract from the Crossroads Bank for Enterprises (CBE)
• Extract from the UBO register
• Minutes of general meetings and decisions of the management body for recent years
• Publications in the annexes to the Belgian Official Gazette
• Shareholder agreements, pledges or options over the shares, where applicable

Accounting and tax

• Annual accounts for the last three to five financial years, as filed with the National Bank
• Trial balance and general ledger for the current year
• Fixed asset and depreciation schedule
• Corporate income tax returns and tax assessment notices
• VAT returns, if the company is VAT-registered
• Correspondence with the tax authorities: audits, adjustments, disputes
• Breakdown of the shareholder current accounts

Financing

• Loan agreements and up-to-date repayment schedules
• Mortgage registrations, mortgage mandates and other security granted
• Sureties and personal guarantees given by the shareholder

Each building

• Title deed (deed of acquisition)
• Cadastral extract
• Property tax (précompte immobilier) assessment notices
• Urban planning information and planning permits
• Soil status document (see below)
• Energy performance certificate (EPC in Flanders, PEB in Brussels and Wallonia)
• Electrical installation inspection report
• For older buildings in Flanders, the asbestos certificate
• Insurance policies
• In co-ownership: basic deed, minutes of the latest general meetings, statement of the reserve fund and charges
• History of major works and quotes for planned works

The soil document depends on the region: the soil certificate issued by Brussels Environment in Brussels, the certified extract from the soil condition database (BDES) in Wallonia, and the OVAM soil certificate in Flanders. In a share deal the buildings do not change owner: the buyer requests these documents as part of its due diligence.

Leases

• All current leases and proof of their registration
• Rent roll: tenant, rent, indexation, expiry, deposit
• Rental guarantees (blocked account or bank guarantee)
• Rent arrears and disputes with tenants

Contracts and disputes

• Property management, maintenance and supply contracts
• Pending or threatened disputes, claims and orders from the authorities
• Employment records, if the company has or has had staff (rare for a real estate company)

How to organise the file

A well-organised file inspires confidence and saves weeks. A few simple principles:

• one folder per topic, numbered according to the headings above;
• one PDF per document, clearly named;
• a table of contents showing what has been provided and what is still missing;
• sharing through a secure space rather than by email, and never originals.

Whatever is missing or raises questions should not be hidden: identified early, it gets negotiated in the price; discovered late, in the guarantee. What the liability guarantee covers is explained here.