Financial due diligence services: what a seller is actually buying

Diligence services are usually bought by acquirers. A seller buys them for two reasons: to prepare a vendor report that gets ahead of the buyer's findings, or to have somebody credible answer the buyer's team so the owner can keep running the business.

Get quotes to sell my business

The vendor exercise

An accounting firm engaged by the seller rebuilds the earnings before marketing, producing an adjusted figure with the reasoning attached. Buyers still do their own work, but they start from a document they have to argue against rather than a blank page, and the seller has already found and fixed whatever was going to be found. On a competitive sale this often pays for itself.

Due diligence support services

The other service is help responding: someone to manage the data room, track the request list, prepare the answers and push back on adjustments. On a small sale your accountant can do this. On anything larger it is a real job, and the alternative is the owner doing it instead of running the business through the most fragile month of the sale.

How M&A due diligence services are priced

Fixed fee for a defined scope or hourly, and the scope is what matters: how many years, how many entities, whether working capital analysis is included, whether they attend calls with the buyer's team. Ask for the scope in writing and ask what happens if the buyer asks for a year more than planned.

Questions people ask about financial due diligence services

Do I need this for a small sale?

Usually not. A prepared file and a responsive accountant do most of the same work at a fraction of the cost.

Will the buyer accept my vendor report?

As a starting point, not as a substitute. Its value is in shaping the conversation and in finding problems while you can still fix them.

Who should do it?

An accounting firm that does transaction work rather than your annual compliance accountant, unless yours has done sales before.

Sources

Get fee quotes to sell your business

Free. We pass what you describe to brokers and advisers who handle that size and type, so you get fee quotes without four introductory calls. We take no part in any sale and never a share of one. We may email you about this enquiry and similar services from this site; opt out any time, including from the first message.

Related answers

Get quotes to sell my businessSee who publishes a fee