due-diligencechecklistacquisitionafrica
Due diligence is the phase where excitement meets reality. You've found a business you love, the numbers look solid, and the seller seems credible. Now it's time to stress-test every assumption before you wire a single dollar.
This checklist is built for buyers acquiring digital businesses — SaaS, e-commerce, content sites, mobile apps — operating in African markets.
Financial Due Diligence
Revenue Verification
- [ ] Bank statements for the last 24 months reconcile with reported revenue
- [ ] Stripe / Flutterwave / Paystack / Payoneer dashboard access or exports verified
- [ ] Breakdown of one-time vs recurring revenue confirmed
- [ ] Currency breakdown: local currency vs USD vs other FX
- [ ] MRR/ARR reconciliation: seats × price × active contracts checked
Profitability
- [ ] Seller Discretionary Earnings (SDE) addbacks documented and explained
- [ ] Owner salary, owner perks, and one-time expenses clearly identified
- [ ] COGS breakdown (hosting, SMS, payment processing fees) verified
- [ ] Staff payroll confirmed against employment contracts
- [ ] Any owner loans or related-party transactions reviewed
Tax and Compliance
- [ ] Tax filings for the last 3 years obtained (or last available years for jurisdiction)
- [ ] VAT/GST compliance confirmed — many African SaaS companies underreport VAT
- [ ] Pending tax assessments or audits disclosed
- [ ] Transfer pricing documentation if multi-jurisdiction
Legal Due Diligence
Business Structure
- [ ] Certificate of incorporation obtained
- [ ] Shareholder register confirmed — no undisclosed minority holders
- [ ] Director resignation letters prepared (or clean transfer docs)
- [ ] Any pledges, liens, or encumbrances on the business confirmed nil
Contracts and Agreements
- [ ] Customer contracts reviewed for assignment clauses
- [ ] SaaS customer terms of service allow ownership transfer without customer consent?
- [ ] Vendor / supplier agreements reviewed for change-of-control clauses
- [ ] Employment contracts — which employees know about the sale?
Intellectual Property
- [ ] Software codebase owned outright by the company (not by a contractor)
- [ ] Domain registration confirmed in company name
- [ ] Trademark filings in operating countries
- [ ] Open source licences in the codebase reviewed (GPL issues?)
Operational Due Diligence
Technology
- [ ] Code quality review (have a developer walk through the codebase)
- [ ] Hosting / infrastructure costs confirmed and documented
- [ ] Uptime / reliability data for the last 12 months
- [ ] Security audit or recent penetration test
- [ ] Data backup and recovery procedures tested
Team
- [ ] Key man risk identified — which employees cannot be replaced quickly?
- [ ] Transition plan: will the seller provide 30/60/90 days of handover support?
- [ ] Non-compete and non-solicitation agreements in place for the seller
- [ ] Equity or retention packages needed to retain key team members?
Customers
- [ ] Top 10 customers confirmed as active (direct outreach or login activity data)
- [ ] NPS or CSAT data reviewed
- [ ] Any customers that have signalled intent to cancel?
- [ ] Customer concentration: no single customer >20% of ARR
Africa-Specific Risks
These are the items most Western due-diligence checklists miss:
Currency and Payment Risk
- [ ] FX hedging strategy (if any) documented
- [ ] Payment gateway reliability — what is the monthly failed payment rate?
- [ ] Mobile money dependency: what happens if M-Pesa / MTN Mobile Money raises fees?
Regulatory and Political Risk
- [ ] Fintech licences (if applicable) in each operating country
- [ ] Data localisation requirements (Nigeria, Kenya, and South Africa all differ)
- [ ] Any government or NGO contracts that carry political risk?
- [ ] Internet shutdown risk assessed (primarily Ethiopia, Sudan corridor)
Infrastructure
- [ ] CDN or edge caching in place for low-bandwidth users?
- [ ] Offline capability for power-outage-prone markets?
- [ ] Reliability of SMS/USSD gateway providers used
Red Flags to Watch
- Revenue that "just happened" to peak in the last 3 months before sale
- Sellers who cannot export raw transaction data from their payment gateway
- Codebase entirely owned by a contractor in another country with no written IP assignment
- Customers billed in local currency with no FX strategy
- A team that is entirely dependent on one technical co-founder who is also leaving
Use this checklist alongside your legal and financial advisors. The goal isn't to find reasons to walk away — it's to eliminate surprises so you can price risk accurately and close with confidence.
Need help with due diligence on a specific listing? Reach out to our team through any listing's contact form.