Who checks what · Before you buy
What does a business broker verify before listing a business?
Published · Reviewed by The Diligence Standard Team · Updated
A broker may review financial records, question inconsistencies and package the seller’s information. The exact scope varies. Listing the business does not by itself establish that earnings, add-backs, customers or transferability were independently verified for the buyer.
A realistic transaction story
Maya received a polished package for a residential cleaning company. The broker had compared the profit-and-loss statement with figures supplied by the seller and had asked about a revenue dip. Maya assumed this meant the earnings had been tested. Her own review later found that several owner expenses were added back without invoices and that the seller still performed all sales calls.
What the evidence changed
The broker’s questions were useful, but the buyer needed a separate reconciliation of earnings, owner labor and bank activity.
What to check
- Write down the exact claim and who supplied it.
- Ask what was independently tested, by whom and under what scope.
- Obtain the broker’s written description of the review and independently reconcile the material numbers.
- Translate any unresolved gap into cash, price, terms, timing or a decision not to proceed.