Due diligence before acquiring a Belgian SME: the five risk areas
Publication · October 16, 2025
Acquiring a small or medium-sized Belgian company requires, ahead of any contractual negotiation, a structured due diligence exercise. This review aims to verify the economic and legal reality of the target company, as reflected in its articles of association, the financial statements filed with the National Bank of Belgium, and its statutory registers. The Belgian Code of Companies and Associations governs corporate governance and the keeping of company records, and provides a first indispensable framework for the purchaser and its advisers.
The first risk area concerns the target's legal and corporate situation: validity of decisions taken by its governing bodies, compliance with representation rules, articles of association restricting share transfers, or pending disputes between shareholders. Checking the Belgian Official Gazette and the Crossroads Bank for Enterprises registers allows the regularity of statutory filings to be confirmed and inconsistencies between the declared and actual situation to be identified.
The second risk area relates to tax matters. The purchaser should examine corporate income tax and VAT filings, as well as any assessments issued by the tax authorities, since certain tax liabilities may, depending on the applicable rules, remain enforceable after the transfer. Particular attention should be paid to tax limitation periods and ongoing audits, which may materialise after closing.
The third risk area concerns employment law and personnel matters. The review covers employment contracts, applicable collective bargaining agreements, provisions for notice periods or severance, and compliance with social security obligations. Where a transfer of undertaking occurs, the protective rules applicable to employees, notably under the regulations governing conventional transfers, must be carefully anticipated.
The fourth risk area lies in the target's contractual commitments: fixed-term commercial contracts, change-of-control clauses that the transaction may trigger, guarantees granted to third parties, or unprovisioned commercial disputes. These elements directly affect valuation and may justify price adjustments or specific warranties in the acquisition documentation.
The fifth risk area, often underestimated in SMEs, concerns environmental and sector-specific regulatory matters, including environmental or operating permits, compliance with data protection obligations, and any licences specific to the activity carried out. The absence or irregularity of such permits may jeopardise the continuation of the business after the acquisition.
These due diligence findings directly inform the negotiation of the sale and purchase agreement, in particular the drafting of the seller's representations and warranties and the indemnification mechanisms, in accordance with the general rules on contractual obligations codified in Book 5 of the Belgian Civil Code.
A useful report separates confirmed findings from missing information. Each risk should identify the supporting document, its operational impact and a proposed response: an additional condition, a specific indemnity or a post-completion action. A share acquisition also needs to be distinguished from an asset acquisition. In the former, the company generally continues to hold its liabilities; in the latter, transfer formalities and employment consequences may follow a different route. The review scope should be agreed before documents are requested.
As the Belgian regulatory framework evolves regularly in corporate, employment and tax matters alike, it is advisable to verify the current state of applicable legislation at the time of the transaction and to seek specialised legal advice tailored to the target company's specific situation.