Free Due Diligence Checklist (47 Items)

Profit and Loss Statements (3 years)Verify revenue trends and profitability over time

Balance Sheets (3 years)Understand assets, liabilities, and equity position

Cash Flow StatementsConfirm the business generates real cash, not just accounting profit

Tax Returns (3 years)Cross-reference with P&L to catch discrepancies

Bank Statements (12 to 24 months)Verify deposits match reported revenue

Accounts Receivable AgingCheck how quickly customers pay and identify bad debt

Accounts Payable AgingIdentify overdue obligations and cash flow pressure

Debt ScheduleUnderstand all loans, terms, and what transfers with the business

Inventory RecordsVerify inventory exists and is valued correctly

Equipment List with ValuesAssess condition and upcoming replacement costs

Insurance PoliciesConfirm coverage and identify gaps

Accounting Software AccessGet full access to QuickBooks, Xero, or equivalent

Revenue by Customer BreakdownIdentify concentration risk

Revenue by Product/Service BreakdownUnderstand what drives the business

Customer ContractsReview terms, renewal dates, and change of control clauses

Customer Retention DataHow many customers come back year after year

Sales Pipeline or BacklogVisibility into future revenue

Pricing HistoryCheck if margins are being squeezed by price pressure

Marketing and Acquisition ChannelsHow does the business get new customers

Online Reviews and ReputationCheck Google, Yelp, BBB ratings

Lease AgreementReview terms, transferability, rent escalation, and remaining term

Vendor and Supplier ContractsIdentify sole-source dependencies and pricing terms

Employee Roster with SalariesUnderstand payroll burden and key person risk

Employee AgreementsNon-competes, non-solicitation, benefits obligations

Organizational ChartWho reports to whom, where the owner fits in

Standard Operating ProceduresAre operations documented or all in the owner's head

Technology and SystemsPOS systems, CRM, inventory management, website

Licenses and PermitsConfirm all are current and transferable

Franchise Agreement (if applicable)Transfer fees, territory rights, renewal terms

Entity Formation DocumentsArticles of incorporation, operating agreement

Litigation HistoryPast and pending lawsuits

Regulatory ComplianceIndustry-specific requirements, health inspections, OSHA

Environmental ReportsPhase 1 environmental if real estate is involved

Intellectual PropertyTrademarks, patents, domain names, trade secrets

Zoning ComplianceConfirm the business can operate at this location

Tax ComplianceNo outstanding tax liens or disputes

Workers Compensation HistoryClaims history and current rates

Due Diligence Checklist