Financial Due Diligence Checklist
- By Hoke Nagahori
- •
- 21 Nov, 2018
This typical list is complete and detailed. Many smaller businesses may not have available this depth of detail.
Bank Statements for the for past three years
Cash Receipts Journals for the for past three years
General ledgers for the for past three years
Cash disbursement journals/check registers for the for past three years
Copies of all Leases and Contracts still in existence including lease for premises.
Copies of all insurance policies and related invoices for the for past three years
Copies of Payroll tax returns and all related schedules for the for past three years
Copies of owner’s W2’s for past three years
Copies of Corporate tax returns for the past three full years
Detailed list of all equipment and supplies.
Copies of Sales Tax returns for past three years
Name and telephone number of seller’s Accountant and Attorney.
Detailed schedule of owner benefits.
Current Balance Sheet and Income Statement.
Schedule of all current clients, with yearly billing and agreement terms, if any.
*This is a sample for education purposes. Consult your financial advisor before use.
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Overview
Business Auction Sale resulted in higher price and Seller choice of Buyers.
In 2022, we executed an Auction Business Sale for a 20+ Year Repair Service (AAA*) with an
EBITDA of $1,500,000* from Revenues of $11,000,000*. The result:
- Time of Market: less than 30 days
- Number of Offers: 3
- Valuation: 33% over market
The Sellers were able to interview multiple Buyers and selected the Buyers who they believe will
be the best caretakers of their employees and legacy.
Time on Market – 27 Days
This is number of days from Seller approval of the marketing materials and marketing strategy to
Seller acceptance of Letter of Intent or equivalent from the successful Buyer. AAA was on the
market for 27 days.
Number of Offers – 3 with more pending
The business received two Letters of Intent, and two email offers:
- Private Equity Group with a National Presence 50+ locations
- $2B Hedge Fund Backed with National Presence 50+ locations
- Private Equity Group with large, diversified portfolio.
The Sellers found a buyer and offer they liked and decided to close the offer process leaving
disappointed Buyers who were hoping to make a serious bid.
Sale Price
Industry Comps indicated valuations in the 3x EBITDA ($4,500,000) to 5x EBITDA
($7,500,000) range for similar business in this industry.
AAA was sold for 6.83x EBITDA or $10,245,000. Significantly more than the industry comps.
This additional Sale Price justifies use of the Auction Business Sale even after payment of
Broker Commissions.
Broker Comments
AAA is an excellent A+ business with General Manager on staff. Owners were are-absentee. All
Buyers were institutional, professional buyers with adequate cash available to acquire the
business. Estimated time to Close after Letter of Intent is 60-90 days. Not every business will
qualify for a Business Auction. Contact us to find out more about Business Auctions.
*The Business Name, Revenues and EBITDA were slightly changed to protect confidentiality of
the Seller.
Please contact us for more information about the Business Auction Sale.
