How long does typical financial due diligence take?

investor profile

October 17, 2023

by an investor from Columbia University - Columbia Business School in Seattle, WA, USA

For those of you who've completed a relatively small transaction ($500K SDE, <$2M purchase price)), how long did your financial due diligence that consists of simple QoE and proof of cash take? Obviously depends on the business but wanted to get a ballpark number, assuming I get the necessary data from the seller reasonably quickly. I think the accounting of the business itself should be pretty straight forward, but one only thing I'm concerned about and want to verify throughly is the seller's personal expenses added back to SDE (there are quite a few items being added back).

Trying to sequence the different parts of due diligence to optimize cost, so wanted to get a rough timeline set to share with the seller and the broker. I figured I could engage the lawyers to draft up Purchase Agreement once I'm comfortable with the financial DD. For example, is 45 days enough as a budget for financial DD?

Thanks!

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commentor profile
Reply by a professional
from Harvard University in New York, NY, USA
The reasonable time from my experience for a small deal is 2-3 weeks. However, based on the situation and urgency, I have assisted searchers/funds with a shorter time frame of 9-10 days to get the complete report out (including databook and proof of cash analysis)

We are a full service global accounting firm with presence in 7 countries and assist lower and middle market transactions extensively. Our India presence, allows us to be cost efficient and at the same time maintain the quality of our deliverables. We currently have the bandwidth to start the project next week. Happy to connect with you.

Email me at redacted for more details and to get a sample copy of our redacted report.
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Reply by a professional
from Georgia Southern University in Atlanta, GA, USA
We quote ~3 weeks from receipt of data. It can be done faster, but a lot of the timeline depends on the Seller's availability and promptness and providing data. If its QuickBooks, then QofE provider should get direct access in order to streamline the process.
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