EPISODE 245.
Key Takeaways:
What due diligence is: The buyer’s inspection/audit of the seller’s business to confirm the story, financials, contracts, and assumptions made pre-LOI.
The emotional shift for sellers: Post-LOI can feel like “we’re done,” but diligence is often the most challenging phase and can be exhausting and distracting.
Why buyers do it: Risk mitigation and validation, plus identifying upside (synergies, growth investment opportunities, consolidation savings).
Common seller mistake: Underestimating diligence and showing up unprepared, both emotionally and operationally.
Role of an M&A advisor: First point of contact, ensuring data is clean/defensible, fast response cadence, and pushing back where appropriate.
“Scope creep” reality: Multiple outside parties (QoE, tax, legal, integration) often ask overlapping questions, creating a “Groundhog Day” effect without strong process management.
Top diligence areas buyers focus on: Revenue quality, customer concentration, contracts/renewals, security posture, key person risk, and scalable delivery model.
Retrade risk signals: Business performance softening during diligence, messy financials, messy contracts, or major unexpected changes in the business.
Keep momentum (they cite ~90 days as a good diligence window) and don’t let diligence distract leadership so much that performance slips.
Listen to Shoot the Moon on Apple Podcasts or Spotify.
Buy, sell, or grow your tech-enabled services firm with Revenue Rocket.
