Due diligence is the buyer’s opportunity to thoroughly evaluate your company before closing the deal.

Think of it as a deep dive into your business’s financials, operations, legal standing, and overall health.

The process reduces risk for the buyer and ensures they know exactly what they’re purchasing.

For you, it’s the chance to prove your company really is as solid as it looks on paper.

Buyers will request information across many areas, typically including:

• Financial records: tax returns, cash flow, debt obligations
• Legal documents: contracts, leases, licenses, compliance records
• Operations: organizational charts, processes, supplier and customer agreements
• HR: employee agreements, benefits, compensation structures
• Intellectual property: trademarks, patents, trade secrets
• Technology and assets: equipment lists, software, IT security

Each buyer’s checklist is different, but expect a comprehensive review.

The best time to prepare isn’t when the buyer shows up—it’s months before you go to market. Here’s how to get ahead:

• Get your house in order: organize your financials, contracts, and HR files.
• Clean up loose ends: resolve outstanding legal issues, document key processes, and update employee records.
• Anticipate red flags: recurring revenue concentration, customer dependence, undocumented agreements, anything that makes buyers nervous should be addressed early.
• Set up a secure data room: provide buyers with organized, confidential access to information.

Here’s where deals get wobbly:

• Scrambling to pull documents at the last minute
• Making promises that aren’t backed up by data
• Letting tiny discrepancies raise big doubts
• Involving too many team members too soon, risking confidentiality

Avoid these, and you’ll save yourself headaches and save your deal.