Transaction & Due Diligence Support
After the LOI
The deal you signed for is not always the deal you find
Due diligence is where you check that the business matches the story you were told. Most of what turns up is small. Occasionally something changes the price or ends the deal, and it is far cheaper to learn that now than after closing. We run the process with you, keep the outside professionals on schedule, and keep a single list of open issues so nothing slips.
What gets examined
Our diligence checklist
Financial
- Tax returns against financial statements and bank deposits
- Monthly revenue and margin trends for at least three years
- Add-backs and owner expenses, one at a time
- Working capital needs and seasonality
- Debts, liens and anything off the balance sheet
Customers and revenue
- Concentration in the top customers
- Contracts, renewal dates and change-of-control terms
- Pricing history and recent losses
- Backlog or recurring revenue that can be verified
People
- Who actually does the critical work besides the owner
- Pay, benefits and any promises made to staff
- Key employee retention plans
- Contractor versus employee classification
Operations
- Suppliers, terms and single points of failure
- Equipment condition and upcoming capital spending
- Systems, software licenses and data ownership
- Licenses and permits that must transfer
Legal and risk
- Pending or past litigation
- Insurance coverage and claims history
- Leases and landlord consent
- Environmental or regulatory exposure where it applies
Who does what
Where we fit with your attorney and CPA
We coordinate diligence and do the business and financial review. Legal review, tax structuring and formal accounting work are done by licensed attorneys and CPAs you engage. We help you find them if you need to, and we make sure their findings feed into your negotiation on price and terms.
How we work
Breakthru Ventures provides consulting and coordination. We do not provide CPA, legal or tax advice; those services are performed by licensed professionals you engage.
Questions
Diligence questions we hear
How long does diligence take?
Usually somewhere between 45 and 90 days for a small business, depending on the seller’s records and the lender’s timeline.
What if we find a problem?
Most findings lead to a price change, a holdback, an escrow or a seller note adjustment. We help you decide which to ask for. Some findings mean walking away, and we will say so.
Ready for your next acquisition?
Whether you are starting a search, evaluating a target or preparing to run a business you just bought, let’s define your next steps.