Due Diligence Checklist for Business Acquisitions

This is the same diligence framework we use on Main Street and lower middle-market acquisitions. For the seller-side walkthrough, see what happens during due diligence.

Financial Review

3+ years of business tax returns and matching financial statements
Year-to-date P&L and balance sheet (current within 90 days)
Bank statements and reconciliations (3–6 months)
Accounts receivable and payable aging
Normalized earnings / add-back schedule with support
Debt schedule and contingent liabilities
Working capital trends and seasonality

Legal & Corporate

Articles, bylaws or operating agreement, and ownership records
Material customer, supplier, lease, loan, and employment contracts
Litigation history and threatened claims
Licenses, permits, and regulatory compliance
Intellectual property ownership
Insurance policies and claims history

Customers & Revenue

Customer list with revenue by account (current and historical)
Concentration analysis (top 1, 5, and 10 customers)
Retention / churn history
Contract terms, renewals, and assignability
Revenue recognition practices

Operations & People

Organizational chart and key employee roles
Compensation, benefits, and employment agreements
Owner daily involvement and transition plan
Systems, software, and data organization
Facilities, equipment condition, and deferred maintenance

Risk & Transition

Environmental issues (if real estate or manufacturing is involved)
IT / cybersecurity and data privacy
Non-competes and non-solicits
Customer and employee communication plan
Working capital target and closing adjustments

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