Due diligence is a term that can have legal meaning, but generally means touching all the bases. Three areas you should be sure to investigate when buying a business:

• Licenses and Permits. Most businesses need licenses and permits to operate. The type of license or permit you need depends on your industry, state and country in which you are located. License and permit requirements also affect where you locate your business, how much you'll have to spend for remodeling, and whether or not you'll have to provide off-street parking.
• Zoning Requirements. It is important to check the zoning requirements for the area where you are acquiring your business. The zoning requirements may affect the type of business that you are intending to operate in a particular area.
• Environmental Concerns. If you are acquiring real property along with the acquisition of the business, it is important to check the environmental regulations in the area.

Buying a Business in a Nutshell 

• You and the seller must assign a value to all business assets transferred and report it to the IRS.
• You can write off goodwill and other intangible business assets you purchase over 15 years.
• Beware of outstanding tax liabilities, always check for tax liens, and require the seller to agree to indemnify you for any tax debts attaching to assets you're buying.
• There is no federal tax on the purchase of a business, but states and localities may impose transfer taxes.

References:
• Small Business Administration