M&A due diligence is the buyer verifying, at their expense, everything you told them. It begins when the letter of intent is signed and it ends when the purchase agreement is, and it is the stage where the largest number of private company sales collapse.
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What is actually being tested
Three things. Are the earnings real, which is financial diligence. Do they continue after you leave, which is commercial and HR diligence. And is there anything the buyer would rather know now than own later, which is legal, tax, regulatory and environmental diligence. Everything on the request list serves one of those three.
Why deals die here
Almost never because something terrible was found. Usually because something ordinary was found late and contradicted what the seller said, or because the process dragged until the buyer's enthusiasm ran out. Both are addressed the same way: prepare the file first and disclose the awkward items early with the fix attached.
What good looks like from the seller's side
A complete package before the request arrives, a single point of contact who answers within a day, and an owner who is available. Sellers who disappear into the business during diligence lose deals, because silence reads as a problem being managed. Blocking out time for this stage is a scheduling decision worth making before it starts.
Questions people ask about M&A due diligence
How long does M&A diligence take?
Four to twelve weeks for a private company, driven mostly by how ready the file was and how many advisers the buyer has engaged.
Who pays for it?
The buyer pays for their own advisers. The seller pays for their lawyer and accountant, and for any vendor report they commission themselves.
Can I limit the scope?
You can agree a diligence list and a deadline in the letter of intent, and you should. An open ended process with no list is how exclusivity turns into a standstill.