I'm selling my 12-person landscaping company. Buyer's attorney sent over a 47-item due diligence request list. My accountant quoted $9k to manage it. I figured, how hard can it be? I'll just pull the documents myself. Three weeks later I've sent the same W-2 three times, my QuickBooks export had a duplicate vendor that I 'fixed' by deleting it, and the buyer's attorney keeps emailing 'please clarify' without saying WHAT to clarify. I'm fairly sure they think I'm hiding something. I'm not. I'm just disorganized. Anyone else try to DIY this and live to tell the tale? Or should I just eat the $9k?
The brutal reality of handling due diligence by yourself
Eat the $9k. Or find someone cheaper. This is not the place to save money.
Did it myself last year. Sold a 6-truck HVAC outfit. Honestly? Not that bad, but I had a bookkeeper who actually knew where everything was. The part that nearly killed me wasn't the documents, it was the questions. Buyer wanted a 'narrative' of every customer churn for two years. I sent a spreadsheet with a column called 'reason' that just said 'moved' or 'died' or 'asshole'. They did not love the last category. I had to walk it back.
Wait, you got a 47-item list? I got 200+. Felt like they wanted to know what I ate for breakfast in 2019. I ended up hiring a fractional CFO for $150/hr for about 20 hours. Way less than $9k and she caught two things I'd have never explained right. Sometimes the middle path works.
The 'clarify' emails are a game. They're not confused. They're building a paper trail in case they re-trade you later. Every vague question you answer badly becomes leverage. That's why you pay someone who knows the game.
OP, I did my own and it worked out, but I got lucky. Buyer was a strategic acquirer who just wanted the customer list and the equipment schedule. If your buyer is a PE firm or has a real attorney, youre gonna have a bad time. Who's the buyer?
Small regional competitor. They've bought two other companies in the last few years. That's probably why the list is so long, they have a template.
Ha, template. That's how they get you. My buyer had a 'standard package' too and then added 30 extra items the week before closing. I asked why and the attorney said 'internal policy'. It was not internal policy. It was fishing. Hold the line line on scope creep or you'll be answering questions until spring.
This. Also, don't delete anything from QuickBooks to 'clean it up'. Deleting stuff during diligence looks way worse than a duplicate vendor. Just add a note. I learned that the hard way. Auditor asked why my vendor list had a gap in numbering. There was no gap. He just miscounted. But I spent two days panicking.
Honest question because I'm about to be in the same boat: if I hire the accountant, what exactly are they doing that I can't? Like, are they just organizing files or do they actually talk to the buyer's lawyer?
Both. A good one reads the request list and knows which items are standard and which are obnoxious, drafts the responses in neutral language, and takes the phone calls so you don't say something dumb under pressure. You're paying for the filter more than the filing.
Update: I called my accountant and asked if he'd do it for a flat project fee instead of hourly. He said yes, $4,200, and he'd start Monday. I don't knoow why I didn't just ask that the first time. Thanks for the shove.