As is the case with any acquisition, there will always be risks involved. Thorough due diligence should be carried out to help reduce these risks and improve your overall understanding of a target business. Businesses of a smaller size can often have poor quality accounting records, so it may be necessary for your due diligence provider to take a more in depth role, working with the target to extract the information required.
In one extreme example we provided due diligence services for the acquisition of a US target that had no accounting records other than bank statements. We had to extract data from these statements to build a set of accounts on the cash basis, and then use these accounts to perform our diligence work. These services provided assurance to our client and helped to reduce the risks associated with the transaction, which is vital in the current climate.