Due diligence before buying a company or a business branch: the preliminary checks

In brief: before signing a letter of intent to buy a company, a business branch or the shares of a company, verify from public data who the seller is, who really controls it, what its latest financial statement says, whether protests or insolvency proceedings appear, and which other companies it is connected with. These are quick checks, which decide whether it is worth paying for the actual due diligence, the one on accounting books, contracts, employees and tax liabilities, which remains the task of the accountant and the lawyer.

Why the checks should be made before the letter of intent

The letter of intent is the moment when the parties fix the indicative price, the scope of the transaction and exclusivity of negotiations. After that, professional due diligence begins: access to documents, consultants, weeks of work and fees. If a public data point already available today would have changed the price or stopped the transaction, it is better to know before you are locked into an exclusivity and before you pay the consultants. This preliminary check does not replace due diligence: it serves to decide whether to start it and with which questions.

Shares, company or branch: what you buy changes what to check

• If you buy shares in a company, the company remains the same, with all its debts, contracts and disputes. The check concerns the company and the shareholders selling to you.
• If you buy the company or a branch, the seller is the company transferring it, and the Civil Code provides that some debts follow you. For a commercial business, the buyer answers for debts relating to the running of the business that predate the transfer, if they appear in the mandatory accounting books, and the seller is not released from them unless the creditors have consented (art. 2560 c.c.). For employees, the employment relationship continues with the buyer, and seller and buyer are jointly liable for all the claims the employee had at the time of transfer (art. 2112 c.c., which also applies to the transfer of a functionally autonomous part of the business).

There is also a tax aspect. Under art. 14 of Legislative Decree 472/1997, in the text in force on 19 October 2026, whoever buys a business or a branch is jointly liable, within the value of what was bought and after prior enforcement against the seller, for taxes and penalties relating to violations of the year of the transfer and of the two preceding years. The same provision provides for a certificate, issued on request by the tax offices, on the disputes in progress and on those settled with unpaid debts: if it is negative, it does not release the buyer. From 1 January 2027, art. 14 of Legislative Decree 472/1997 is repealed and the same rules pass to art. 16 of the Consolidated Text on Tax Penalties (Legislative Decree 173/2024, as amended by Decree-Law 200/2025): which reference is in force on the date of your transfer is for your accountant to verify.

In a business branch there is a practical limit: the public financial statement is that of the transferring company, not of the branch. Public data tells you how solid the seller is, not how much the branch is worth.

Checks on the seller

• Who signs and with what powers: that the person you are dealing with appears among the directors or legal representatives of the selling company.
• Who really controls it: the beneficial owner, including through other companies. If you buy shares from a holding company, the person who decides may not appear in the search of the target company (see the guide to beneficial ownership).
• Insolvency proceedings and protests: a transfer by a seller with a proceeding in progress follows different rules, to be checked with your lawyer; protests show whether the seller has had tensions with creditors, which matter precisely for the rule in art. 2560 c.c. What they are, and how to read them, is explained in the guide on protests, prejudicial entries and insolvency proceedings.
• Corporate relationships: in which other companies the seller's shareholders and directors hold offices or shares. This can reveal a connection with one of your competitors, or other companies closed or in difficulty within the same group.
• Individual shareholders, if you buy shares from them: in this case the check also concerns the individuals, with a declared purpose and its own rules (Verifica Persona, from 29€).

Checks on the company or the branch

• Filed financial statement, with its date: net equity, share capital and debts in aggregate form. A financial statement more than 18 months old is an outdated snapshot. The financial statement does not give you the list of creditors: that is in the accounting books, to be requested in due diligence.
• Reclassified financial statement: the same items reorganised to read the capital structure and profitability, useful for comparing the price asked with what the financial statement shows.
• Properties registered in its name: a patrimonial fact. It does not say whether the properties are free of mortgages or seizures: for that a mortgage inspection is needed (see prejudicial entries at the land registry).
• Warning signs: eroded net equity, a financial statement not filed for some time, a recently changed director. None of them alone decides; together they tell you which questions to ask the seller.

What remains for the accountant and the lawyer

Public data does not reach where professional due diligence reaches. It remains for your consultants, among other things:

• the accounting books, to understand which debts of the transferred company appear and therefore follow you (art. 2560 c.c.);
• the position of employees: accrued claims, collective agreements applied, trade union agreements (art. 2112 c.c.);
• the contracts in progress: unless otherwise agreed, the buyer takes over the contracts entered into for running the business that are not of a personal nature, and the third-party contracting party may withdraw within three months of notice of the transfer if there is just cause (art. 2558 c.c.);
• the tax position and the certificate provided for by art. 14 of Legislative Decree 472/1997 (from 2027, art. 16 of Legislative Decree 173/2024);
• disputes, licences and authorisations, intellectual property;
• the form of the contract: for businesses subject to registration, the contract must be proven in writing and, if made by public deed or authenticated private writing, filed by the notary with the Companies Register within thirty days (art. 2556 c.c.).

What this check is not

Veryfy is neither a law firm nor an advisor on extraordinary transactions: it does not value the company, does not estimate a price and does not analyse confidential documents. It cross-checks financial statements, the Registro Imprese and other official databases to show facts with source and date and warning signals, not a judgement on the transaction. If the transaction is closer to an alliance than to a purchase, such as a joint venture or an exclusivity, start from the map of corporate due diligence for partnerships and agreements.