Selling a Football Club: Five Essential Due Diligence Checks on Buyers

On any type of M&A (mergers & acquisition) transaction it is expected that a buyer will undertake due diligence on the target company which it intends to acquire or into which it intends to invest.  The due diligence exercise is usually a detailed investigation, often over a number of weeks, into the operational, financial, legal and possibly other elements of the target business.  It often involves engaging a number of external advisers and can have a high cost associated with it.

However, in the context of the sale of a football club, it is also not uncommon for the seller to undertake certain due diligence on the buyer. Everton Football Club’s proposed sale to 777 Partners, which collapsed once questions started to arise as to 777 Partners' funding and reputation^[1], highlights the need for sellers to check a prospective buyer’s financial capability and credibility.

With more clubs now being owned (in whole or part) by sovereign wealth funds and private equity, there is likely to be even greater emphasis on the due diligence of any buyer on the future sale of such clubs. Future sales of these clubs will likely demand even closer examination of who is buying, why, and whether they have the means and credibility to follow through.

This article considers the due diligence that might be undertaken on a prospective buyer of a Premier League or Championship club. It focuses on five essential areas:

• Evidence of buyer funding
• League requirements
• Contractual consent & change of control
• Buyer motivations & future funding
• Purchase process