Buying a business means buying a set of promises about the future — that the earnings are real, that the customers stay, that the work doesn't leave with the seller. Due diligence is how you test those promises before your money is committed. This is the working checklist: five areas, 20 concrete verifications. Print it, work it line by line, and price every risk you find. For the full process around it, see how to buy a business.
Price is a multiple of provable earnings. Verify the number before you value it.
The P&L, the tax returns, and the bank deposits should tell the same story. Gaps between them are the first thing to chase down — they're either innocent bookkeeping or the whole deal.
Don't accept the seller's SDE/EBITDA recast on faith. Confirm each add-back is genuinely discretionary or non-recurring; aggressive add-backs inflate the asking price. See add-backs explained.
Month-by-month revenue and margin over three years. A business marketed right after a record year may be selling you the peak; flat-to-rising momentum is worth more than a single high mark.
How much cash does the business need to simply keep running, and how old are the receivables? Working capital is often negotiated separately at close — know what's normal here.
Earnings that walk out with the seller or one big customer aren't earnings you're buying.
If one customer is above roughly a fifth of revenue — or the top few are most of it — that's concentration risk a lender and you should price. Ask what happens if the largest leaves.
Contracts, memberships, and retainers transfer; project and referral revenue tied to the owner may not. Recurring revenue is why two similar businesses sell at different multiples.
Is demand from the brand and systems, or from the owner's personal relationships and reputation? Personal goodwill is the hardest thing to transfer in a sale.
Can prices move with costs? What's the real retention rate? A book of customers quietly churning out behind steady headline revenue is a trap.
The more the business needs the departing owner, the less of it actually transfers to you.
Pricing, key-account relationships, vendor terms, the one system in the owner's head. Each undocumented dependency is either a transition risk or an earnout term.
Who actually runs the day-to-day, will they stay, and are any of them a flight risk after a sale? Buyers often make retention of key staff a closing condition.
Condition and age of equipment, the state of the software and integrations, licenses that must transfer, and any deferred maintenance you'll inherit on day one.
How long will the seller stay to introduce customers and document the operation? A thin transition on an owner-dependent business is a recipe for a post-close revenue drop.
Every unresolved issue becomes a price reduction, an escrow holdback, or your problem.
Remaining term, renewal options, rent escalators, and whether the landlord must consent to assign it to you. For a location-dependent business the lease can be as important as the financials.
Customer, supplier, franchise, and employment agreements — which transfer, which need consent, and which contain change-of-control clauses that trigger on a sale.
Industry licensing, local permits, and regulatory standing must be current and transferable. A licensing gap discovered after close is an expensive surprise.
UCC liens, pending or threatened lawsuits, and unpaid payroll or sales tax. These follow the assets (or the entity) unless the deal is structured to leave them behind — get counsel.
Price is half the deal; how it's paid and financed is the other half.
Whatever you finance — bank, SBA, or seller note — the business's own cash flow has to service it comfortably in a normal year, not a perfect one. Build the model before you sign.
The structure changes your tax basis, which liabilities you assume, and which contracts carry over. This is a question for your attorney and CPA, not the seller's broker.
A seller note or an earnout tied to performance keeps the departing owner invested in a clean handoff and bridges price gaps — see seller financing. Align the structure with the risks you found above.
Your attorney for the purchase agreement, your CPA for diligence — independent of the seller's broker, who represents the other side. Their job is to protect you specifically.
Run its numbers through the free SDE calculator for a baseline value range, read what sellers look for in a buyer so you reach the real financials faster, or start a confidential conversation — two sentences about what you're looking to acquire, no documents, a reply within one business day.
This checklist is general education for planning purposes. It is not legal, tax, accounting, financial, or investment advice, and it is not a recommendation to buy any particular business or a representation about the performance or returns of any acquisition. Diligence procedures and what matters vary widely by business; consult your own attorney, CPA, and advisors on your specific situation before entering into any transaction.
Dom Dominguez, MBA, MS is a Florida-licensed business broker. As required by Florida Real Estate Commission Rule 61J2, the broker license is registered with Hedgestone Business Advisors, a trade name of Steinberg Re Holdings, LLC, a Florida limited liability company (collectively, "Hedgestone"). Hedgestone neither owns nor operates this Site; this disclosure appears solely for brokerage-licensure compliance. Vaultolio is a brand name for the website only and is not itself a legal entity or licensed brokerage. Florida Broker License No. FL BK3529743. Mailing address: 2431 NW 92nd Ave, Coral Springs, FL 33065. Phone: 813-389-9466. Vaultolio does not claim or represent licensure in any other state.