Evidence standard · On both sides
What is a practical evidence standard for buying a small business?
Published · Reviewed by The Diligence Standard Team · Updated
Confidence should rise with traceability. A verbal explanation is a claim. A seller schedule organizes the claim. Source records show underlying activity. Independent reconciliation tests whether the sources agree and what the result means for the transaction.
A realistic transaction story
A seller said a major expense was one-time and provided a spreadsheet identifying it. The ledger confirmed the payment, invoices explained the work and bank activity confirmed cash paid. Independent analysis then determined that half the cost would recur under new ownership.
What the evidence changed
More documents did not simply confirm or reject the claim; they refined the amount that was economically supportable.
What to check
- Write down the exact claim and who supplied it.
- Ask what was independently tested, by whom and under what scope.
- For each material claim, record the source, period, completeness, reconciliation, reviewer and effect on the decision.
- Translate any unresolved gap into cash, price, terms, timing or a decision not to proceed.