What Is Due Diligence When Selling a Business in Florida?
You’ve found a buyer, negotiated a price, and signed a Letter of Intent. Now comes the part that makes most sellers nervous: due diligence. Here’s what it actually involves, how long it takes, and how to get through it without losing your deal.
What Is Due Diligence?
Due diligence is the buyer’s formal investigation of your business before they commit to closing the deal. After signing the LOI, the buyer has a set period — usually 30 to 60 days — to verify that everything you’ve represented about the business is accurate.
Think of it as the buyer doing their homework. They want to confirm the revenues are real, the expenses are what you said, the customers are loyal, the leases are assignable, and there are no legal landmines hiding in the filing cabinet.
What Do Buyers Look at During Due Diligence?
The scope of due diligence depends on the size and type of business, but typically covers:
Financial Due Diligence
- 3–5 years of tax returns (business and sometimes personal)
- Profit and loss statements (monthly, not just annual)
- Balance sheets
- Bank statements (to verify cash flow)
- Accounts receivable and payable aging reports
- Seller’s Discretionary Earnings (SDE) recalculation
Legal Due Diligence
- Business entity documents (articles of incorporation, operating agreement)
- Existing contracts with customers, vendors, and suppliers
- Lease agreements and assignability
- Any pending or past litigation
- Licenses, permits, and regulatory compliance
Operational Due Diligence
- Employee list, roles, salaries, and tenure
- Key person dependencies (does the business run without you?)
- Customer concentration (is one customer more than 20% of revenue?)
- Supplier relationships and terms
- Equipment condition and ownership
- Inventory counts and valuation
How Long Does Due Diligence Take?
Most deals in Florida have a 30 to 60 day due diligence window written into the LOI. For smaller main street businesses, 30 days is common. For larger deals or more complex operations, 60–90 days is more realistic.
How quickly it goes depends heavily on how organized you are as the seller. Sellers who have clean financials, organized documents, and fast response times get through due diligence in weeks. Sellers who scramble to find records drag it out — and risk losing a buyer who gets frustrated or nervous.
What Can Go Wrong During Due Diligence?
Due diligence is where deals die. Common reasons include:
- Undisclosed liabilities — Debts, liens, or lawsuits the buyer discovers
- Revenue discrepancies — Numbers that don’t match what was represented
- Lease problems — A landlord who won’t allow lease assignment
- Key person risk — The buyer realizes the business can’t run without you
- Customer concentration — One big customer who may not stay post-sale
- Financing contingencies — The buyer’s SBA loan gets denied
How to Prepare for Due Diligence
The best thing you can do is prepare before you ever list your business. That means:
- Getting your last 3 years of taxes filed and organized
- Separating personal expenses from business expenses
- Documenting your processes so the business can run without you
- Reviewing your lease for assignability language
- Knowing your customer concentration numbers
- Resolving any open legal issues before going to market
Sellers who do this prep work ahead of time get higher prices and cleaner closings. Those who don’t often face renegotiation — or a failed deal — when the buyer finds something unexpected.
Working Through Due Diligence With a Broker
A good business broker doesn’t just find you a buyer — they help you prepare for due diligence before you go to market, manage the document flow during the process, and troubleshoot issues before they kill the deal.
If you’re selling a business in St. Augustine or Northeast Florida and want to understand what due diligence will look like for your specific situation, let’s talk. The more prepared you are going in, the smoother it goes.
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Related Reading
- What Happens During Due Diligence When Selling a Business?
- What Is a Letter of Intent When Selling a Business in Florida?
- How to Sell a Business Without a Broker in Florida
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