How Business Owners Can Stay in Step Through the Most Critical Part of a Sale
Selling your business is often the single most significant financial and emotional decision you’ll make as an owner. And one of the most critical phases in that journey is due diligence—the deep investigation buyers conduct to confirm your business is precisely what it appears to be. Picture this: it is like stepping onto a crowded dance floor. The buyer leads, the tempo can be unpredictable, and every step matters. Due diligence feels like a choreographed routine, where preparation and timing make the difference between gliding smoothly and stumbling; any misstep can derail your dream exit.
At the Business Transitions Summit (BTS), we believe due diligence doesn’t have to be a mystery or a nightmare. By understanding what buyers are looking for and preparing in advance, you can turn this challenging stage into a strategic opportunity to showcase your business at its very best.
What Is Due Diligence?
Due diligence is essentially the buyer’s deep dive into your business—financials, operations, legal matters, contracts, employee arrangements, intellectual property, and more. It is the buyer’s magnifying glass, and they’ll be examining every detail of your organization.
For business owners, it often feels like running two jobs at once: keeping the company on track while fielding endless questions, gathering documents, and trying to anticipate what’s coming next. Stressful? Absolutely. Demanding? For sure. But Manageable? YES, with the right preparation.
We have compiled some actual scenarios from business owners in the due diligence process to give you an idea of what can happen and the potential implications.
1. Financial Records: Clarity is Key
A manufacturing business once provided incomplete financial statements, and the CPA had incorrect data. The discrepancies slowed down the sale by weeks.
Takeaway: Audit or review your financials in advance (with your CPA if needed). Clean, accurate books build trust and save time.
2. Owner Dependency: A Red Flag
A software founder who managed every client relationship personally scared off buyers who doubted the company could survive without him.
Takeaway: Reduce owner dependency by delegating tasks and documenting processes. Build a business that can run without you.
3. Contracts and Legal Matters: Expect Scrutiny
Ambiguous supplier contracts stalled a foodservice tech deal until the owner made revisions.
Takeaway: Review contracts—customer, vendor, employee—before you’re under the microscope.
4. Operational Efficiency: Impress Buyers
One industrial services company had documented workflows that proved scalability. Buyers were eager to move forward.
Takeaway: Streamline processes and document everything. Transparency builds value.
5. Customer Concentration: Buyers Will Test Stability
During due diligence on a distribution company, the buyer discovered that over 60% of the revenue came from one major customer. While the seller had mentioned this risk casually before, the intensity of buyer scrutiny surprised them. The buyer requested direct customer references and built contingency plans before agreeing to move forward—slowing the process and adding legal protections to the deal.
Takeaway: Review your customer base for revenue concentration before due diligence. Be prepared to demonstrate strong contracts, renewal likelihood, and strategies for diversification if a few accounts equal more than 70% of your revenue.
The Emotional Toll Is Real
Due diligence isn’t just a paperwork drill—it’s an emotional rollercoaster. Owners juggle stress, fear, and fatigue while keeping employees and customers happy. That’s why at BTS, we emphasize preparation and education. When you know what to expect, you reduce stress and take back control.
Here are some Key Takeaways from our business owners and advisors who have successfully navigated the dreaded due diligence process. These will help you keep in step during due diligence.
- Be Prepared: Organized records make due diligence smoother.
- Document Everything: Processes, roles, and relationships matter.
- Fix Weak Spots Early: Don’t let buyers find them first.
- Get Educated: Trusted advisors and proactive preparation save time, stress, and money.
- Manage the Stress: Surround yourself with trusted advisors, peers, or mentors who can help you process the pressure and keep your eye on the goal when the tempo speeds up.
The Bottom Line: Stepping out onto the due diligence dance floor can feel intimidating—like the spotlight is on you and one wrong move could throw off the whole routine. It’s overwhelming at first, but with preparation, practice, and the right support, you move with confidence. Instead of stumbling, you’ll find yourself hitting every step—and when it all comes together, it can feel like that big lift in Dirty Dancing, soaring high with clarity, strength, and purpose.
That’s why the Business Transitions Summit exists: to educate business owners with the tools, knowledge, and guidance they need to step onto the due diligence dancefloor and shine under the spotlight during the most important transitions of their ownership journey.
