Due diligence
How to do due diligence on a Thai bar purchase: verifying the lease and licences, the real financials, the company's liabilities, physical stock and debts, and using professionals.
The step amateurs skip and regret
Thailand bar sales run heavily on trust, charm and “the books” scribbled on a napkin. Professional due diligence — boring, unromantic, and the difference between an investment and a donation — is where you find what the seller isn't saying, and where you start telling the honest sellers from the deliberately dishonest ones (common scams).
The checklist
- Legal: verify the lease (term, registration, transferability — leases), all licences, and, if buying a company, its corporate records, director/shareholder structure and any encumbrances (company structure);
- Financial: demand real records, not claims. Cash businesses are easy to inflate — cross-check stated revenue against stock purchases, staff numbers, utility bills and observed footfall. Sit in the bar over multiple sessions and count;
- Liabilities: if buying the company, you inherit its debts, tax arrears, unpaid staff obligations and any disputes — a share sale without a liability audit is Russian roulette;
- Physical: inventory the equipment and confirm it's owned and included (not rented, leased or unpaid); check the stock; inspect the premises condition and any pending repairs;
- Relationships: the landlord, the neighbours, the local authorities, key staff — talk to them independently of the seller.
Financial due diligence, in more depth
“Trust me, it does well” is not a financial statement. Ask for bank records where they exist, filed tax returns (which, unlike a private ledger, were submitted to the Revenue Department and are harder to fabricate after the fact — see taxes & accounting), supplier invoices and utility bills, and reconcile them against each other. A business claiming heavy nightly turnover but modest stock purchases and low electricity use is telling you something. Where formal records simply don't exist, treat every revenue claim as unverified until you've built your own picture from independent observation.
Legal due diligence, in more depth
Beyond the headline lease and licence checks, ask specifically: is the company (if you're buying shares) party to any pending disputes, court cases or debt claims? Are there liens, unpaid loans against equipment, or guarantees the company has given that would transfer with ownership? Has the company met its filing obligations with the Department of Business Development and Revenue Department, or are there gaps that suggest deeper problems (company structure)?
Physical and operational due diligence
Walk the premises at different times, not just during a curated viewing. Check the condition of equipment that would be expensive to replace, confirm what's actually included versus what merely sits on the premises (some equipment may belong to a supplier under a stocking arrangement, not the seller), and talk to current staff, where practical, about how the business actually runs day to day — their answers are often more candid than the seller's.
Red flags that should stop a deal, or at least slow it down
- Refusal or reluctance to show original documents, insisting on summaries or translations only the seller controls;
- Pressure to move fast, skip your own lawyer, or pay a deposit before verification (common scams);
- Financial claims that don't survive basic cross-checking against stock, staff or utility usage;
- A lease or licence position that's “fine, don't worry about it” rather than demonstrably fine.
Use professionals
- A licensed Thai lawyer for the legal and structure review — non-negotiable (why);
- An accountant to test the financials and the company's tax position (taxes & accounting);
- Independent translation of every document you sign — never rely on the seller's summary;
- The cost of proper due diligence is trivial against the cost of skipping it, and it feeds directly into how the purchase itself should be structured. Every cautionary tale on the pitfalls page started with someone who didn't bother.