Selling a Business

Surviving Buy-side Diligence

Know the six diligence workstreams, what each one is actually hunting for, and how to run your side so the period is short, the findings are small, and the price you agreed is the price you get.

  • Advanced
  • 8 min total
  • 12 chapters

What decision this helps you make: How to staff, sequence, and manage confirmatory diligence — and how to respond when a workstream produces a finding.

What this topic is

A practical guide to confirmatory diligence from the seller side: the six parallel workstreams a buyer runs — financial, tax, legal, commercial, operational, and insurance or benefits — what each one is testing, the findings that recur most often in private company deals, and how a seller should staff and manage the process so it closes on time.

Why it matters

Diligence is where agreed prices become actual prices. Most of the value lost between a letter of intent and a closing is lost here, and the losses are concentrated in a small number of recurring findings that are almost entirely predictable. A seller who knows the list can find their own problems first, and a problem you disclose is worth a fraction of the same problem discovered.

Who should learn it

Owners and CFOs inside or approaching a diligence period, and advisers managing a sell-side response.

What you will understand

  • The six workstreams, what each tests, and who runs it on the buyer side
  • The findings that recur most often and what each one typically costs
  • How to staff and sequence your side so diligence does not consume the business
  • How to respond to a finding — the difference between conceding arithmetic and conceding leverage

Prerequisites

Common misconception

"We have nothing to hide, so diligence will be fine." Diligence does not find dishonesty. It finds disorganisation, undocumented judgements, and liabilities you did not know you had — historic sales tax, worker classification, unassigned intellectual property, an unrecorded accrual. Honest sellers with untidy records lose more in diligence than anyone else, because they never looked.