Main Street & SMB

BizBuySell transaction diligence

Published · Reviewed by The Diligence Standard Team · Updated

Treat the listing as a sourcing document, not verified earnings. Rebuild SDE, add-backs, owner role, lease/site control, working capital, customer concentration and state licensing before relying on the asking multiple.

Diligence focus

  • SDE and add-back support
  • Tax-return and bank reconciliation
  • Owner replacement cost
  • Lease and real-estate continuity
  • Customer concentration
  • Equipment and deferred CapEx
  • Working-capital needs
  • State/local licenses and permits

First evidence requests

  • Three years of tax returns
  • Monthly P&L and balance sheet
  • General ledger detail
  • Bank statements / deposit support
  • Add-back schedule with evidence
  • Customer revenue concentration
  • Payroll and employee roster
  • Lease, licenses and asset schedule

Warning signals

  • Headline cash flow cannot be tied to records
  • Large discretionary add-backs without source support
  • Owner hours described as absentee while owner performs key work
  • Inventory or equipment value added to price without quality analysis
  • Short lease or uncertain assignment
  • Licenses depend on seller or one key employee