Your Due Diligence Checklist for Small Business Acquisitions


Acquiring a small business is not as easy as 1,2,3 and the swipe of a credit card. Aside from the business skills and personality traits, acquisition entrepreneurship requires a lot of searching and researching.

Luckily, the business buying geniuses, Codie and Ryan, over at Unconventional Acquisitions put together a due diligence checklist to help navigate the hunt for your next business venture.


Enjoy and use wisely.




Take more than a peak at the companies financial records and past performance. You'll want a well-rounded idea of what debt, revenue, and/or tax repercussions you would be acquiring with the business purchase.

  • What was the gross revenue over the past 3 years?

  • How much has the margin been?

  • What is the average profit for each product or service?

  • What is the current cash flow situation?

  • Have all local, state, and federal taxes been paid in full?

  • Is there any debt that needs to be paid off immediately after closing?

  • Are there any debts that will have to be assumed as part of the sale?

  • Do any loans need refinancing upon ownership transfer?

  • Is there an emergency fund set up specifically for unexpected expenses related to owning this business?

  • Can I get copies of financial records such as income statements, balance sheets, etc.?

  • Can I get copies of tax returns for both personal and corporate income taxes for three previous years prior to purchase?

  • Has a valuation report been done recently so I know what price range is fair when negotiating a sale price with current owners (if applicable)?

  • Have all accounts receivable been collected up until now?

  • Is there an audit trail showing accurate financials?



Assets, Inventory, and Equipment

Analyzing the assets, inventory, and equipment of a potential acquisition help you determine the fair market value and identify any future problems (or opportunities).

  • Do you have a list of all of the assets and inventory?

  • Are all the assets and inventory included in the asking price?

  • Are there any assets that need to be replaced soon after closing?

  • Does all inventory have proper documentation such as expiration dates?

  • Do you have maintenance records for all equipment?

  • If you could add one new piece of equipment or asset to grow the business what would your next purchase be?




A business is only as strong as the people there. Find out who they are. And hire more.

  • How much do employees earn on average and how often are they paid (weekly, bi-weekly)?

  • What kind of insurance does this business currently carry (liability, property & casualty, worker’s compensation)?

  • Are all employees covered by worker’s compensation insurance in case of injury or illness on the job?

  • With my coaching and guidance would any of the current employees make a good Operations Manager?

  • Who are the 3 most important people on the team and why?

  • If you had to let go of one employee, who would it be and why?

  • How compliant are employees with laws and regulations?



Transition Plan

Minimize risk, ensure continuity, and facilitate a smooth transition by doing your due diligence.

  • Will I receive training from existing owners prior to taking over operations so I can learn first-hand how things work in practice and not just in theory?

  • Is there an employee manual that outlines policies and procedures?

  • Who is responsible for filing taxes for the current year?

  • Who will handle accounting duties once I take over operations?

  • Are all employees on a contract or are they ‘at will’?

  • What is the average length of employee tenure at this business?

  • How many employees? FT? PT? Contractors?

  • Are they aware of a potential sale? Would they be willing to stay on?

  • Who handles new hire onboarding processes?

  • Has any legal advice been sought in regard to intellectual property, customer information protection, etc.?



Business Operations

Knowing policies and procedures before acquisition can help you proactively train to get acquainted or plan for any necessary changes.

  • What are the core processes required to run the business?

  • Who is in charge of each process?

  • Are those processes documented?

  • Do clients pay regular invoices?

  • How long does customer service typically take?

  • How often does web content need updating?

  • Is email marketing being used?



Customer Retention & Feedback

Knowing your new customer base — their needs, their wants, and their frustrations — can help build brand loyalty and reputation during the time of ownership transition. It is also more cost-effective to keep current customers happy than it is to try and attract new ones.

  • Has reputation management taken place?

  • What feedback has come from customers?

  • Do customer reviews appear regularly?

  • Are customer loyalty programs offered?

  • Where do most of your current clients come from?

  • What is the average customer LTV?

  • What percentage of clients are return customers?

  • What percentage of your business do your top 5 clients account for?




Acquiring the circus means acquiring the monkeys. Any ongoing legal battles, licensing, and regulation requirements — costs included — would become yours to deal with.

  • Are there any pending legal actions against the company?

  • Are there any pending lawsuits against customers or suppliers?

  • Does this business require specialized licenses or certifications (such as food handling certificates)?

  • Have all licenses necessary for operation been obtained and maintained properly up until now?

  • Is my new role as owner going to require me to obtain special licensing or certifications prior to running operations effectively (such as food handling certificates)?

  • Does this business have contracts with other businesses (customers and/or suppliers) that may need to be renegotiated when ownership changes hands?

  • Are there any government regulations that must be adhered to when operating this type of business in my area (zoning laws, environmental regulations, etc.)

  • Does this business have patents, trademarks or copyrights registered under its name which will transfer over with ownership change hands (if applicable)?




A business is also only as good as the technology and innovations it chooses to operate with. Ineffective and outdated tech will hurt your acquisition investment.

  • Will customer information need protection?

  • Is online payment processing accepted?

  • Are there existing infrastructure systems (CRM, accounting software) that I need to be familiar with when taking over the business?

  • Is the current website secure from cyber attacks and hacking attempts?

  • Is the checkout process on the website user-friendly and efficient?

  • Are there any backups or redundancies in place in case of a system failure or data breach?

  • Does this business use any cloud services or online storage solutions for its operations?

  • Has an IT professional been keeping up with tech maintenance (patch updates, etc.) regularly?




Why acquire a business that isn't growing? That's for you to determine on your due diligence journey.

  • Can sales commission be earned through referrals?

  • What digital marketing efforts are already established?

  • Can SEO efforts increase organic search results?

  • Does website design meet industry standards?

  • Should social media presence increase?


What it all boils down to is, "Ask before you buy". We're here to assist in the acquisition process. Check out our guide on Small Business Acquisition Loans or contact us today with any additional due diligence questions.

Contact Us


Subscribe now to get The Helm directly in your inbox.