Last updated: June 2026
Key takeaways
- Diligence spans financial, commercial, legal, tax, and operational workstreams.
- Deals break on surprises: undocumented revenue, hidden concentration, or adjustments that do not hold up.
- A prepared seller holds price through diligence; an unprepared one gives discounts.
- Build the data room before launch, not when diligence opens.
What due diligence is
Due diligence is the buyer's verification of the business after a letter of intent is signed, usually under a period of exclusivity. It is where the story you told gets tested against the evidence. A prepared company holds its price; an unprepared one watches surprises turn into discounts.
The workstreams
- Financial. Quality of earnings, working capital, the durability of revenue and margins.
- Commercial. The market, the customers, retention, the pipeline, and the competition.
- Legal. Contracts, IP, disputes, employment, and corporate housekeeping.
- Tax. Historic positions and the structure of the deal.
- Operational and IT. Systems, dependencies, and key-person risk.
Where deals break
Deals rarely break on a single number. They break on surprises: a customer concentration the seller downplayed, earnings that do not hold up as quality of earnings, contracts that cannot be assigned, or a key person who turns out to be the business. Each surprise is leverage for the buyer to retrade the price.
How to prepare
The protection is to run your own diligence before the buyer does, sometimes called vendor diligence, and to build a complete, well-organised data room. Find your own weaknesses first, address or explain them, and present a business that has nothing to hide. Our due diligence work does this from both sides of the table.
How long it takes
On a mid-market deal, diligence typically runs four to eight weeks, running alongside negotiation of the definitive agreement. Good preparation is what keeps it from dragging, and from eroding the price.