I've seen a couple of people posting in here asking for Due Diligence Checklists. I came across this one which is pretty good. Just enter your email and it's free!
https://library.axial.net/sample-due-diligence-checklist
Due Diligence Checklist for Searchers
![](https://55550cf88fb9105859d2-ecc273435fde99d2e690dfef78341117.ssl.cf5.rackcdn.com/img/defaultprofile.png)
by a searcher from Harvard University
More on Searchfunder
Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
1. What is the retention rate of the client base? If it's not recurring revenue, what is the reorder rate and how does that compare to the broader industry? If you have clients dropping like flies and the sales engine has to always find the next new client to keep the business afloat, your top-line may look normal but the work to accomplish it may be astronomical. Remember, you are going to have to run this business so think about the day to day of that.
2. What is the retention rate of the employees / contractors? High turnover is a definite red flag, outside of scenarios where there is significant seasonality (like retail). Even still, I'd look for a high rehire rate as a sign of a stable business.
3. Do you like the customers? I remember looking at businesses when I was searching and everything turned into numbers on a spreadsheet. On the other side, those numbers are clients/customers who are upset about something. If you don't like your customers, you'll hate your business.
You need to do deeper DD than this, but this will save you so much time on bad businesses. Hope that helps.