Due Diligence Checklist for Business Buyers
Due diligence is the most consequential phase of a business acquisition. It is the buyer's chance to validate everything the seller has represented and uncover what they have not. A disciplined approach catches issues early and prevents post-closing surprises.
Financial Diligence
Three years of tax returns, audited or reviewed financials when available, monthly P&L for the trailing 18 months, complete bank statements, accounts receivable aging, accounts payable aging, inventory listing, and any related-party transactions. Match returns to bank statements line by line.
Operational Diligence
Customer concentration analysis (revenue by top 10 customers), supplier dependencies, employee count and roles, key person dependencies, contract review (leases, customer agreements, vendor agreements), insurance coverage, and any pending litigation.
Legal Diligence
Corporate records, ownership structure, regulatory licenses and permits, employment matters (especially independent contractor classification), intellectual property, any liens or judgments, and pending or threatened litigation. Specialized counsel is essential.
Industry-Specific Items
Restaurants: health department history, lease assignability, equipment ages. Medical: payor mix, billing compliance. Construction: bonding capacity, project pipeline. Each industry has its own list.
Educational content only — not advice. KQT Advisors, LLC is a commercial loan broker; we are not a lender, attorney, accountant, financial advisor, or fiduciary. We do not originate loans or make lending decisions. The information in this article is provided strictly for general informational and educational purposes and reflects our understanding at the time of writing. It is not — and must not be construed as — financial, tax, legal, accounting, investment, or any other professional advice, and creates no advisor-client relationship. Loan programs, rates, terms, eligibility requirements, fees, and approval criteria are set by individual lenders, the SBA, and other parties and are subject to change at any time without notice. Examples are illustrative only and not guarantees of outcome. Nothing here is a commitment to lend, an offer of credit, or a representation that any specific structure will be available to or appropriate for any borrower. Always consult your own qualified financial, tax, and legal advisors before acting on any information in this article. To the maximum extent permitted by law, KQT Advisors, LLC and its principals, employees, agents, and affiliates disclaim all liability for any direct, indirect, consequential, or incidental loss or damage arising out of any use of, reliance on, or inability to use the information in this article.