BuyBuyer's Due Diligence: What to Expecter's Due Diligence: What to Expect

Buyer's Due Diligence: What to Expect

When you sell your company, you can expect buyers to do two due diligence phases. Each one answers a different question for them, and each requires a different kind of readiness from you. By understanding the preliminary and confirmatory due diligence, you can keep control of the narrative, protect value, and shorten time to close.

Preliminary Due Diligence: “Will They Bid, and at What Price?”

Preliminary due diligence answers the question: "Is this a good deal? Should we buy?"

This is the buyer’s first pass. They have limited time and just enough information to set a value range. The goal here is to show a compelling but realistic picture of the company. If you try to hide anything, the deal will fall apart or get renegotiated later.

Show strategic fit. Provide a concise memo that explains market position, customer mix, and growth levers.

Normalize earnings. Share an adjusted EBITDA that strips out owner perks, one‑time events, and unusual costs.

Flag operational strengths and investment gaps. Buyers expect some capital spend. Identify it early so they price it in rather than penalize you later.

Address key‑person risk. Outline the roles of founders and senior managers. If you plan to stay for a transition, state it. If not, present a succession plan, even if it is modest.

This will allow credible, thoughtful buyers to put through a Letter of Intent (LOI). If there are multiple potential buyers, your upfront clarity drives competitive tension and higher offers.

Confirmatory Due Diligence: “Is everything we heard true, and what are we missing?”

Once an LOI is signed, the exclusivity period begins. The buyers will now spend real time and money on underwriting the investment. The buyer’s advisors will request full access to finance, tax, legal, HR, and operations.

They may commission a Quality of Earnings (QoE) report to validate the numbers independently. They will look into operations and your IT systems. They will request management meetings to review operations and finances with you and your team.

Disclose all the issues early and disclose it with a remediation plan. Surprises in week four cost more than frank conversations in week one.

Respond consistently and rapidly. The buyers tend to ask the same questions from a different angle to see if the answers are consistent.

Closing Insights for Sellers

When deals fall through or re-trade during due diligence, it often comes from late discoveries. Control the timing of disclosures, and you control the discussion on value adjustments.

Even after signing, keep running the business as if the sale might fall through. The buyers will keep asking for updated financials, and strong monthly results help buyers push the deal across the line.

A well-executed diligence process demonstrates professionalism on both sides, mitigates surprises, and maintains momentum. Deliver accurate information promptly at each stage, and the closing day becomes a formal confirmation of the value you have already established.