A due diligence checklist for buying a small or mid-sized company
Updated 2026-11-03
The documents and answers that keep an SME acquisition moving after the first conversation, without a hundred-file data room.
A well-established materials business raising growth capital for its growth round, headquartered in Rajkot, Gujarat.
Commercial
List the top customers and suppliers, with the share of revenue or purchases, contract end dates, and whether the contract survives a change of control. Describe pricing: who sets it, and what happened to margin in the last two years.
Explain the sales motion. If the founder is the salesperson, the buyer is buying a transition plan, not just a customer list. Write that plan down before diligence, or the buyer will write a lower one for you.
Financial and tax
Collect audited or reviewed accounts, management accounts for the current year, GST and income-tax filings, debt agreements, and a net-debt schedule. Add a monthly cash view. A yearly profit figure without working capital is not enough to price a deal.
Prepare a quality-of-earnings bridge even if it is simple: reported profit, one-offs, promoter costs, and related-party items. Label each line with the document that supports it. The person answering questions later should not have to reconstruct this from memory.
Legal and people
Gather incorporation documents, shareholder agreements, statutory registers, major contracts, property papers, licences, insurance, and a list of disputes. For people, collect the organisation, key-person dependence, and any unpaid statutory employee dues.
If a licence, a lease, or a brand sits outside the company, say which entity owns it and whether it will transfer. Buyers price what they will actually receive on completion.
How to run the list
Put the checklist on the deal as questions, not as a zip file with no index. Each answer should point at a file or say, plainly, that the document does not exist. “We will send it” is not an answer you can track.
Close items in writing. A diligence question that stays open while the drafts of the agreement move ahead comes back as a price chip. Deal Desk’s questionnaires are for this: the question, the reply, and what is still unread, on the deal itself.