BusinessFinder
ResourcesDue Diligence

Due Diligence Checklist

A comprehensive guide to thoroughly evaluate a business before acquisition. Don't skip these critical steps.

Financial Due Diligence

  • Review 3 years of financial statements
  • Verify revenue sources and consistency
  • Analyze profit margins and trends
  • Check for any outstanding debts or liabilities
  • Review tax returns and compliance
  • Understand customer payment terms
  • Verify bank statements match reported revenue
  • Analyze cash flow patterns

Operational Due Diligence

  • Document all business processes
  • Review vendor and supplier relationships
  • Assess technology stack and infrastructure
  • Evaluate team structure and key employees
  • Review customer support processes
  • Understand inventory management (if applicable)
  • Check for operational dependencies
  • Review automation and systems

Legal Due Diligence

  • Review all contracts and agreements
  • Check intellectual property ownership
  • Verify business licenses and permits
  • Review employee/contractor agreements
  • Check for any pending litigation
  • Review privacy policy and compliance
  • Verify trademark and domain ownership
  • Assess regulatory compliance

Technical Due Diligence

  • Review codebase quality and documentation
  • Assess technical debt
  • Verify hosting and infrastructure setup
  • Review security practices and history
  • Check API integrations and dependencies
  • Evaluate scalability potential
  • Review backup and disaster recovery
  • Assess development processes

Customer Due Diligence

  • Analyze customer concentration
  • Review churn rates and trends
  • Understand customer acquisition channels
  • Calculate customer lifetime value (LTV)
  • Review customer feedback and NPS
  • Assess customer support satisfaction
  • Understand competitive positioning
  • Review customer contracts and terms

Market Due Diligence

  • Analyze market size and growth
  • Identify competitors and positioning
  • Review industry trends
  • Assess barriers to entry
  • Evaluate regulatory environment
  • Understand market risks
  • Review pricing competitiveness
  • Assess future market opportunities

Due Diligence Best Practices

Request Raw Data

Always request direct access to analytics, bank accounts, and accounting software rather than just screenshots or reports.

Talk to Customers

If possible, speak with a few customers to understand their experience and satisfaction with the business.

Use Professionals

For significant acquisitions, hire an accountant, lawyer, and technical expert to review their respective areas.

Need Help With Due Diligence?

Our advisors can guide you through the due diligence process and help identify potential issues.