What due diligence actually involves for a small business seller
What a buyer will check, what they'll ask you for, and how to get through it without it taking over your life.
By This article covers legal and financial matters. It's general information to help you ask better questions, not advice for your situation. Velaro isn't a law firm, registered tax agent or licensed financial adviser. Please check anything important with a qualified adviser before you act.
In short
- Expect requests for financials, contracts, licences, staff details and asset lists.
- A tidy, numbered document folder can halve the time it takes.
- Share sensitive details in stages, under a confidentiality agreement.
Due diligence is the stage where a buyer checks that the business is what they understood it to be. For sellers it can feel intrusive and tiring, especially while you're still running the business. Knowing what's coming makes it far easier.
Financial checks
Expect requests for profit and loss statements, balance sheets, tax returns, BAS statements and bank statements, often for two to three years. The buyer will compare them with each other and with what you told them earlier.
Your accountant can prepare a tidy pack before this stage, which saves a lot of back and forth.
Legal and compliance checks
The buyer's solicitor will review leases, key customer and supplier contracts, licences and permits, insurance, any disputes and your business structure.
For trades, expect questions about who holds which licences, safety records and any regulatory issues.
People and operations
Expect questions about staff roles, pay, entitlements, how long people have worked for you and who is critical to the business. The buyer will also want to understand how work is won, scheduled and delivered.
Staff details are sensitive. Share them in stages and under your confidentiality agreement.
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Assets and equipment
The buyer will want a list of vehicles, plant and equipment, with condition, ownership and any finance owing. They may inspect key equipment.
A simple asset register with photos and service records makes this quick.
Keeping it manageable
Agree how requests will be made, ideally in batches through one person, and where documents will be shared. Set a realistic timetable.
Keep running the business well throughout. A dip in results during due diligence can change the conversation.
Your checklist
What to do next
- Ask your accountant for a due diligence pack
- Gather leases, contracts, licences and insurance
- Prepare a staff summary without names at first
- Build an asset register with photos
- Agree one channel for questions
- Keep the business running as normal
Example
An HVAC owner set up a shared folder with numbered sections before due diligence started. Most of the buyer's questions were answered from the folder, and the process took five weeks instead of the ten he had feared.
An illustrative example, not a real client or transaction.
Questions owners ask
How long does due diligence take?+
It varies, but four to eight weeks is common for a small business. Good preparation shortens it.
Can I say no to a request?+
You can ask why something is needed and whether a summary will do, especially for sensitive information early on.
What if the buyer finds a problem?+
It's usually better that problems come out early. Many are fixable or can be reflected in the price or terms.
Sources and further reading
Information checked against these sources as at October 2026. Rules and thresholds can change, so check the current position with your adviser.
Important
This article is general information only. It doesn't take your personal circumstances into account and isn't financial, legal, tax, employment or valuation advice. Velaro Group is a buyer of businesses. It isn't a business broker, licensed financial adviser, registered tax agent or law firm, and it doesn't act for sellers. Please get advice from your own accountant, solicitor or financial adviser before making any decision. Read the full disclaimer.
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