Sell-Side Due Diligence

The case rests on three asymmetries. Discovery timing: an issue found pre-market is a project; the same issue found by a buyer mid-exclusivity is a repricing event with no competitive tension left to discipline it, because by then the other bidders are gone and the deal fatigue is yours. Narrative control: the party that quantifies an issue first frames it, the customer concentration presented with cohort retention data is a characteristic; discovered raw in buyer diligence, it is a risk. Process speed: a prepared seller compresses buyer diligence from months to weeks, which keeps multiple bidders engaged longer, and competitive tension is worth more multiple points than any addback. The engagement shapes range from a readiness assessment (find the issues, fix quietly, no report shared) to a full sell-side QoE with a databook buyers and their lenders work from, chosen by process type: auctions justify the full product, negotiated deals often need only the readiness layer. Either way, the principle is the same one that governs all diligence: the side that has done the analysis controls how the issues are presented.

What we do: We shape the engagement to your process: a private readiness sweep or a full vendor product buyers work from.

The pre-market sweep, run in priority order: revenue recognition onto a defensible policy with the historical periods conformed, because revenue findings attack the multiple itself and buyers’ QoE teams start there (the technical layer per our ASC 606 practice); cutoff and accrual discipline installed so the monthly financials the databook will present actually hold; related-party untangling, the family payroll, the owner’s building at a handshake rent, the affiliated vendor, each moved to market terms or documented for clean normalization, since undocumented related-party flows read as findings even when innocent; personal expense hygiene, stopped prospectively (an addback with a clean recent period is credible; one that runs through last month invites the question of what else does); and the filing infrastructure, contracts findable, balances supported, the close on a calendar, which is the controller discipline applied to exit preparation. Twelve months of clean financials is the single most valuable diligence asset a seller can build, because it lets you demonstrate each normalization instead of arguing for it.

What we do: We run the pre-market sweep in priority order and build the twelve clean months that convert arguments into demonstrations.

The construction discipline: every adjustment built to the same evidence tiers a buy-side team applies, contractual, transactional, asserted, with the asserted tail kept deliberately short, because every weak item reduces the credibility of the entire report (the mechanics per the QoE adjustment standards, applied from the seller’s side); run-rate adjustments presented with the completed event and the arithmetic (the signed price increase, the exited lease, the realized cost action), not the planned one; the known problems included, framed, and quantified, the customer concentration with its retention history, the margin dip with its explained cause, because an issue you present with supporting data reads as a known characteristic, while one the buyer discovers reads as a problem; and the working capital and debt-like analysis run pre-emptively, a peg proposed from the seller’s own trailing analysis before the buyer’s team anchors one from theirs. The output, the report and the databook behind it, becomes the process’s reference document: buyers diligence against it rather than from scratch, which is exactly the position the seller wants the numbers to occupy.

What we do: We build your best supportable EBITDA to buy-side evidence standards, with the known issues framed before they are found.

The information architecture, built before launch: a databook, monthly P&L, balance sheet, and the analytical schedules (revenue by customer, adjustment detail, NWC trends) in a consistent, tie-able package, constructed so every number traces to the trial balance and every schedule reconciles to every other, because buyers test internal consistency before they test anything else; the data room populated to the standard request list in advance, contracts, statements, payroll, tax, organized so diligence confirms preparation rather than finding disorganization; the metrics reconciled to the financials, the ARR in the deck tied to the revenue in the databook through a bridge that exists before someone asks for it; and Q&A run as a controlled process, one channel, answers reviewed for consistency with everything already provided, response times managed to keep momentum without signaling that the team is stretched. Management’s time is the scarcest deal resource, and this machinery exists to spend it on buyers and the business rather than on late-night document searches, which is exactly the strain buyers look for.

What we do: We construct the databook and data room to tie internally everywhere, and run Q&A as one controlled channel.

The defense posture: every anticipated finding pre-analyzed, the sell-side work already mapped the exposure areas, so when the buyer’s QoE challenges an addback or proposes a peg, the response is the prepared schedule, not a scramble; the definitions drafted in advance, EBITDA and NWC definitions proposed by the seller’s side early, in the databook and the draft SPA, because the party that drafts the definition wins most of the true-up before it starts (the mechanics per the hub’s SPA treatment); triage discipline on the findings themselves, concede the real ones fast (disputing a correct finding weakens your credibility on the arguable ones), rebut the arguable ones with evidence, and expose the negotiating positions by asking for their support; and the closing statement rehearsed, the peg mechanics, the debt-like list, and the proration math agreed in structure before the time pressure of closing week. Sellers who prepare this layer keep deals at the letter-of-intent price far more often than sellers who improvise it.

What we do: We pre-analyze the anticipated findings and fight the definitional battles from paper drafted early.

The founder-exit workstream, honestly staged: owner economics normalized with evidence, compensation reset against market data for the actual role, the personal expenses cataloged and stopped, family arrangements documented, building addbacks a buyer’s team verifies rather than debates; the key-person question addressed structurally, customer and vendor relationships contracted where they lived on handshakes, the second layer of management made visible in the process, because buyers price founder dependence into both the multiple and the earnout; earnout and rollover literacy before the LOI, sellers who will hold paper or earn contingent value should understand the accounting and the measurement mechanics (the classification realities per our ASC 805 treatment) before signing terms that define them; and the finance function stood up to deal grade, often our controller layer installed for the exit year, so the monthly numbers the process depends on actually arrive monthly. A founder gets one exit; the preparation determines whether buyers see a business that runs without the founder or discount the price for founder dependence.

What we do: We stage the founder exit honestly: economics normalized with evidence, key-person risk addressed, and the finance function stood up for the year.