Due diligence audit is a loose phrase. Nobody audits a business in the technical sense as part of a sale; what happens is a diligence review that people call an audit because it feels like one. The distinction matters because the two produce different documents and different obligations.
Get quotes to sell my business
What an audit actually is
A statutory or voluntary examination of financial statements against a reporting framework, resulting in an opinion. It is performed under professional standards, it has a defined scope, and the auditor takes responsibility for the opinion. Most US private companies of the size that change hands here have never had one.
What a diligence review is
A buyer's advisers rebuilding the numbers and reading the paper for their own client's purposes. No opinion is issued to anybody but the client, the scope is whatever was agreed with them, and it goes wider than an audit ever would, into customers, contracts, people and systems.
Why the difference matters to a seller
Being unaudited is not a weakness in a private sale and does not need apologising for. What matters is whether your records support what you claimed. A seller with clean, reconciled management accounts and evidenced add backs comes through diligence better than an audited one whose add backs are assertions.
Questions people ask about due diligence audit
Do I need audited accounts to sell?
Almost never for a private sale. Clean, reconciled records and evidenced adjustments matter far more.
Will the buyer's team give me an opinion?
No. Their report is for their client. You see its consequences in the price and the agreement.
Should I get an audit before selling?
Rarely worth the cost and time. A quality of earnings exercise addresses what a buyer actually asks.
Why do people call it an audit?
Because it feels like one from the seller's side: strangers examining records and asking for evidence. The phrase is loose rather than wrong, and it is worth knowing the difference when a buyer's engagement letter uses precise language.