Journal article
The Adequacy of Pre-purchase Due Diligence in Independent Small Business and Franchising
Australian Accounting Review, Vol.28(1), pp.127-139
2018
Abstract
This research reports an in-depth study of the due diligence activities that prospective independent small business operators and franchisees in Australia undertake prior to purchasing or starting up their businesses. Although academic literature and industry publications promote undertaking 'proper due diligence', there is a lack of empirical research into the nature of due diligence and its effect on business outcomes. Using a qualitative approach, 60 currently and formerly operating independents and franchisees were personally interviewed, exploring the diversity of approaches to undertaking due diligence prior to entering business. The research revealed that differences occur in both the type and amount of due diligence undertaken by independents and franchisees and highlighted further differences between current and former operators. In general, the due diligence undertaken by participants was relatively unsophisticated with few exceptions of rigour and planning. Where prospective independents and franchisees were entering business for the first time, their appreciation of business was naïve. A steep learning curve followed during which they often recognised flaws in their initial research. As a result of this qualitative in-depth research, we present a set of propositions regarding due diligence and a model for future testing on a large sample. © 2017 CPA Australia Ltd (CPA Australia).
Details
- Title
- The Adequacy of Pre-purchase Due Diligence in Independent Small Business and Franchising
- Authors
- J Buchan (Author) - University of New South WalesLorelle Frazer (Corresponding Author) - Griffith UniversityS Weaven (Author) - Griffith UniversityB Tran-Nam (Author) - University of New South WalesAnthony Grace (Author) - Griffith University
- Publication details
- Australian Accounting Review, Vol.28(1), pp.127-139
- Publisher
- Wiley-Blackwell Publishing Asia
- Date published
- 2018
- DOI
- 10.1111/auar.12164
- ISSN
- 1035-6908
- Copyright note
- Copyright © 2018 Wiley-Blackwell Publishing Asia. This is the accepted version of the following article: Buchan, J. , Frazer, L. , Weaven, S. , Tran-Nam, B. and Grace, A. (2018), The Adequacy of Pre-purchase Due Diligence in Independent Small Business and Franchising. Australian Accounting Review, 28: 127-139. doi:10.1111/auar.12164, which has been published in final form at http://dx.doi.org/10.1111/auar.12164
- Organisation Unit
- School of Business and Creative Industries; University of the Sunshine Coast, Queensland; USC Business School - Legacy
- Language
- English
- Record Identifier
- 99450936402621
- Output Type
- Journal article
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