Run a structured due diligence
DD is where deals are won and lost. Use a four-stream model so nothing falls through the cracks.
Financial DD
- 3 years of audited accounts + management accounts to last month
- Bank statements — all accounts, full 24 months
- Top 20 customers with revenue per customer
- Top 20 suppliers with payable balances
- Aged debtors and aged creditors reports
- Stock count and obsolescence policy
- Reconciliation of revenue between bank deposits, accounting system, and KRA filings
Legal DD
- Certificate of Incorporation, CR12, M&AA, all share transfers
- Material contracts: customer, supplier, distribution, IP licences
- Employee contracts, leave/PAYE/NSSF/SHIF compliance, gratuity liability
- Property leases or title deeds
- Pending or threatened litigation
- All required licences and permits (BRS, county, sector regulator)
Tax DD
- Tax Compliance Certificate (TCC) — current
- VAT, PAYE, corporate tax returns for last 5 years
- Any KRA audits, assessments, demand letters, or objections
- Withholding tax certificates issued and received
- Transfer pricing documentation if there are related-party transactions
Commercial / operational DD
- Customer interviews (with seller's permission) — top 5–10 names
- Site visits — every location, unannounced if possible
- Key-person dependency map — who's mission-critical, and what's their retention plan
- Systems audit — POS, ERP, CRM, accounting; what data actually exists?
- Competitive scan — direct competitors, pricing, market share trend
Cash sales not reconciling to bank deposits. Owner running personal expenses through the company. Single customer > 40% of revenue. Tax filings not matching audited accounts. Key employee with no contract. Pending lawsuit not disclosed. Lease expiring in 6 months. Any one of these warrants either a price chip or a walk.
The information in this guide is provided for general guidance only and is subject to change. Fees, timelines, and regulatory requirements in Kenya are updated regularly. Before acting, please confirm details with the relevant authority (KRA, eCitizen, BRS, county government, or other regulator) or speak with a qualified MyBiashara advisor. MyBiashara is not liable for decisions made solely on the basis of this content.
