What due diligence is required for an asset sale?

The level of due diligence carried out on an asset sale is vastly reduced compared to a share sale. But it’s certainly not an easy ride. Although the acquirer’s liability doesn’t start until they take over those clients, they don’t want to get caught up in issues caused by bad advice from the previous adviser.

They will therefore want to look at a number of different files to check the quality and suitability of your advice, both on an initial basis, but also at those ongoing reviews. They will also want to take a close look at what it is that they’re buying.

They’ll really wants to understand the clients. They’ll tend to want a very detailed breakdown, showing all client households, age of clients, postcode, how much is invested in what tax wrappers in one investment strategy. Are these clients accumulators, or deccumulators? And what are the fees attached to those clients? This will then be reconciled against your bank accounts.