How to Get Through Due Diligence When Selling Your Business
- Peter Flippen
- Jun 30
- 5 min read
Updated: 1 day ago
Selling a small or mid-sized business is no small feat. You’ve spent months (maybe years) getting your operations tight, your financials clean, and your company ready to impress potential buyers. When that well-earned letter of intent (LOI) is finally signed, it’s a big moment, one worth celebrating.
But soon after, the due diligence request list arrives. Suddenly, your “Yay!” moment turns into “Oh my…”
Buyers don’t just take your word for how the business performs. They want to dig in and validate everything from your revenue to your contracts to your cyber insurance. That’s due diligence in a nutshell: the buyer’s deep-dive investigation into your business before finalizing the deal.
Here’s how to navigate the process without losing your sanity while keeping the deal on track.
Understand What’s Coming
First-timers are often surprised by how detailed the due diligence process gets. A typical buyer diligence list is broken into broad categories like:
Financials / Quality of Earnings
Employee Benefits / HR
Tax
Insurance
Legal
IT and Cybersecurity
Operations
Each category contains dozens of sub-requests. For example, just under “Financials,” expect to gather revenue by customer, monthly P&Ls, AR aging reports, fixed asset lists, and more.
This isn’t meant to overwhelm. It’s intended to prepare you. The more you understand the scope upfront, the better equipped you’ll be to manage it.
1. Pace Yourself
You’re still running a company while all of this is happening, which means due diligence becomes a second full-time job. Most diligence periods aim for 60 days, but realistically, 90 to 120 is often more achievable, especially if you want to maintain sanity and value.
Set weekly goals. Tackle one or two categories at a time. Avoid the temptation to stay up until 2 a.m. trying to knock it all out. Diligence is a marathon, not a sprint.
2. Engage Your External Partners
You do not have to do this alone.
Your CPA can prepare financial reports, tax filings, and accrual-based statements.
Your attorney can review contracts and organize corporate governance documents.
Your benefits and insurance brokers can pull together policies, census data, and claims history.
Your IT provider can document cybersecurity measures, licenses, and system access controls.
In short, lean on the experts who already help keep your business compliant and running. They know where the bodies (or at least the spreadsheets) are buried.
3. Strategically Bring in Your Internal Team
Telling your entire staff about the sale too early can cause anxiety. But trying to do everything without help from your key people? That’s often a mistake.
At the right time, loop in trusted managers or department heads. Let them know what’s happening, how they can help, and how their loyalty will be rewarded. A closing bonus can go a long way toward aligning interests and ensuring their cooperation.
Bonus: Buyers often want to speak with your leadership team before closing. Preparing them early makes that step go much smoother.
4. Start Early on the Prep Work
Even if you’re not actively selling your business, there’s prep you can do now that will make due diligence dramatically easier when the time comes.
Ask your CPA to:
Prepare reviewed financials if your business doesn’t already have them.
Shift reporting to accrual accounting for better comparability and accuracy.
Address any lingering tax issues or planning opportunities.
Ask your attorney to:
Review corporate governance documents to make sure they’re up to date.
Audit contracts for assignment or change-of-control clauses.
Locate stock records, equity grants, or missing legal agreements.
Buyers don’t expect perfection, but they do expect organization and transparency. A little work now prevents a fire drill later.
5. Use a Diligence Tracker
You don’t need fancy software, but you do need a system. A simple diligence tracker, organized by request, responsible party, status, and comments, can help keep everything on schedule.
A good buyer will provide a tracking spreadsheet. Use it to track what’s complete, what’s in progress, and what needs escalation. This is especially helpful when multiple people are contributing documents or updates.
6. Work With Your M&A Advisor
Your advisor is your quarterback during this process. They’ve done this before, and more importantly, they know what’s reasonable and what’s not.
They can triage requests and explain what’s standard versus excessive.
They’ll help you frame responses and avoid over-disclosing too soon.
They’ll track progress, remind parties of deadlines, and flag when buyers start to go off the rails.
In short, a good advisor manages the people, paperwork, and pressure so you can focus on the business.
7. Expect Curveballs and Stay Calm
Buyers will ask questions that seem irrelevant or repetitive. They’ll want to review documents you haven’t thought about in years. And they’ll likely push for information that feels intrusive.
It’s normal.
Due diligence is a form of risk management. The buyer is trying to uncover issues now, before money changes hands. Some questions will lead nowhere. Others will reveal gaps you need to address before closing. Either way, patience and professionalism will help you get through it.
8. Don’t Let the Business Slip
Perhaps the most challenging part of diligence is keeping the business running strong while you’re buried in spreadsheets.
But don’t forget: buyers want a company that’s still performing well at closing, not just six months ago. If performance dips during the diligence period, it can jeopardize valuation, delay closing, or even kill the deal.
Delegate. Protect your calendar. Let your team take on more while you focus on the deal. And keep your eyes on revenue, customer service, and operations until the ink is dry.
Final Thoughts
The due diligence process can feel like a never-ending checklist, and in many ways, it is. But it’s also a sign that you’ve made it to the final stages of a transaction. That’s a massive accomplishment for any entrepreneur.
By staying organized, engaging the right help, and preparing early, you can move through diligence with confidence. And if you hit a bump in the road? Take a breath. You’ve built a great business. Now it’s time to close the deal with the same discipline and focus that got you here.
Want a sample diligence request list or tracker? Reach out! We’re happy to share templates to help you get a head start.
Co-Authors: Peter Flippen, IEI Advisors and Valerie Mellema, Words You Want
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