Due diligence
How to do due diligence on a Pattaya business: verify the lease and licences, test the financials, check liabilities, and why professionals are worth it.
The step buyers skip and regret
Thai small-business sales run heavily on trust, charm and figures scribbled in a notebook. Professional due diligence — unglamorous and absolutely essential — is where you find out what a seller isn’t volunteering, and where honest sellers start to look different from dishonest ones (scams & pitfalls).
The checklist
- Legal: verify the lease or premises rights (term, registration, transferability — leases vs freehold), every licence the business needs to trade (licensing), and, if buying a company, its corporate records, shareholder structure and any encumbrances (foreign ownership);
- Financial: demand real records, not claims. Cash businesses are easy to inflate — cross-check stated revenue against stock purchases, staff numbers, utility bills and your own observed footfall over several visits at different times;
- Liabilities: in a share sale, you inherit the company’s debts, tax history and any disputes — a share purchase without a liability audit is a bet, not an investment;
- Physical: inventory the equipment and stock, confirm ownership (not rented, financed or unpaid for), and inspect the condition of the premises;
- Relationships: speak to the landlord, neighbouring businesses and, where practical, staff — independently of the seller, not through them.
Financial due diligence in practice
“It does well, trust me” is not a financial statement. Ask for bank records where they exist, filed tax returns (harder to fabricate after the fact than a private ledger — see accounting & tax), supplier invoices and utility bills, and reconcile them against each other. A business claiming heavy turnover on modest stock purchases and low utility use is telling you something worth listening to.
Legal due diligence in practice
Beyond the headline lease and licence checks: is the company, if you are buying shares, party to any pending disputes or debt claims? Are there liens or guarantees against the business that would transfer with ownership? Has it kept up with its filing obligations, or are there gaps that suggest deeper problems (company structure)?
Diligence that changes with the business type
A restaurant’s diligence leans on health and alcohol licensing and kitchen equipment condition; a guesthouse’s leans on hotel licensing, booking-platform reviews and room-by-room condition; an online business has almost no premises risk at all but real diligence questions of its own — who genuinely owns the domain, the social accounts, the supplier and payment-gateway relationships, and whether any of that is transferable rather than personally tied to the seller. See business types for the fuller breakdown, and franchises specifically if the business trades under someone else’s brand — franchise diligence adds the franchisor’s own standing and the agreement’s termination terms to the list.
Red flags that should slow a deal down
- Reluctance to show original documents, offering only summaries the seller controls;
- Pressure to move fast, skip your own lawyer, or pay a deposit before verification;
- Financial claims that don’t survive cross-checking against stock, staff or utilities;
- A lease or licence position that is “fine, don’t worry about it” rather than demonstrably fine.
Use professionals — and use what they find
A licensed Thai lawyer reviews the legal and ownership structure; an accountant tests the financials and the company’s tax position; independent translation covers every document you sign. The cost is trivial next to the cost of skipping it, and it feeds directly into how the purchase itself should be structured — and, after completion, into how you keep protecting what you found and verified rather than letting the same risks creep back in once you’re running the place yourself.