M&A due diligence checklist
Mergers and acquisitions transform businesses, but success hinges on thorough preparation during the due diligence phase. Explore the 8 essential categories of documentation you need for M&A transactions.
Learn More
I need to sell my business Solution Center
Selling a business is a complex process that requires careful planning and execution. With proper guidance, business owners can maximize value and navigate potential challenges that may arise during the transaction.
How to sell your business: A strategic approach
At BPM, our transaction advisory team guides business owners through each stage of the sale process. We focus on practical solutions that help achieve optimal outcomes while minimizing disruption to your ongoing operations.
How to sell your business: A strategic approach
A successful business sale requires careful planning and execution at each critical stage. Understanding this proven four-stage process helps maximize your company’s value and ensures a smooth transition.
Preparation & valuation
Understanding what your business is worth
When selling your business, proper valuation is the cornerstone of the entire transaction. This initial stage involves a comprehensive assessment of your company’s financial health, operational efficiency, and market positioning. More than just calculating a number, this process reveals your business’s true worth to potential buyers and establishes realistic expectations for your proceeds. A thorough valuation considers historical performance, projected growth, industry trends, competitive landscape, and both tangible and intangible assets.
“Accurately determining the value of your business is critical when preparing for a sale. A thorough valuation establishes realistic expectations and helps identify opportunities to maximize your company’s worth before going to market.”
What happens during this stage:
- You’ll need to organize financial documents from the past 3-5 years
- Your business operations will be analyzed to identify strengths and weaknesses
- Financial statements will be “normalized” to show the true earning potential
- Your business’s market position and growth prospects will be evaluated
- Assets and liabilities will be carefully documented and assessed
- If you have an interested buyer, their offer may be evaluated against market value
How BPM supports you:
- Our Business valuation team applies multiple methodologies to determine your company’s market value, giving you a realistic price expectation
- We conduct a comprehensive Quality of earnings (QoE) analysis to validate your income streams and demonstrate sustainable cash flow to potential buyers
- If needed, our CFO services team provides financial leadership to help prepare your business for sale
- We help organize and prepare documentation that presents your business effectively to potential buyers
- We identify and address financial or operational issues that could affect your selling price
Buyer engagement & deal structuring
Designing the optimal approach with potential buyers
Whether you already have an interested buyer or need to find the right match for your business, how you structure and negotiate your transaction significantly impacts your financial outcome. This stage involves identifying and engaging with qualified buyers (if needed) and developing a deal framework that maximizes your after-tax proceeds while addressing your objectives. The right approach varies depending on your situation – from confidentially marketing your business to qualified prospects to negotiating optimal terms with an existing interested party.
“The structure of your transaction can have profound implications for your financial outcome. The right approach can significantly enhance your net proceeds, provide financial security, and ensure a smoother transition to new ownership.”
What happens during this stage:
- If you need buyers: Your business is confidentially marketed to qualified prospects
- If you have a buyer: Initial discussions evolve into more detailed negotiations
- Various deal structures are evaluated (asset sale vs. stock sale, earnouts, seller financing)
- Tax implications of different structures are assessed
- Letters of Intent (LOIs) are prepared and reviewed
- Purchase agreement terms are considered
How BPM supports you:
- If seeking buyers: We help identify and approach qualified prospects while maintaining confidentiality
- If you have a buyer: We assist in evaluating their offer and negotiating favorable terms
- We develop Tax-efficient deal structures to help minimize tax liabilities and maximize your net proceeds
- Our M&A tax services team navigates the complexities of business restructuring
- We design comprehensive Transaction advisory services tailored to your unique situation
- We create clear documentation to support a smooth transaction process
- We identify and help mitigate potential risks before they become obstacles
Due diligence navigation
Navigating the critical examination phase
Due diligence represents the most intensive and potentially stressful phase of selling your business. During this period, prospective buyers conduct an exhaustive investigation of every aspect of your company—financial, operational, legal, technological, and human resources. This comprehensive examination typically lasts 60-90 days and involves responding to numerous document requests, facilitating management meetings, and addressing a continual stream of questions. It’s also the stage where deals most commonly falter, as buyers uncover issues that weren’t apparent during initial discussions.
“Due diligence is where many deals encounter challenges or fall apart entirely. Having experienced guidance during this phase can mean the difference between a successful transaction and a failed one.”
What happens during this stage:
- Buyers will request and review extensive documentation
- Financial records will be scrutinized in detail
- Legal agreements, contracts, and liabilities will be examined
- Operational processes and systems will be evaluated
- Customer relationships and market position will be verified
How BPM supports you:
- We conduct thorough Financial due diligence to identify and explain financial trends
- We provide Tax due diligence to assess historical tax positions
- We perform IT and security due diligence to address technological and cybersecurity questions
- We deliver Human resources due diligence to evaluate organizational structures and policies
- We guide you through the due diligence process, anticipating and addressing buyer concerns
Closing & transition
Finalizing the deal and planning your next chapter
The closing and transition stage transforms all your preparation and negotiation into tangible results. This final phase encompasses a series of carefully orchestrated steps to complete the transaction while ensuring business continuity. The closing process itself involves extensive documentation—purchase agreements, representations and warranties, covenants, indemnifications, employment contracts, and more—each requiring careful review. Beyond the legal paperwork, this stage also addresses practical transition matters: communicating the change to employees, customers, and vendors; transferring operational knowledge; and implementing systems to maintain business momentum.
“A well-executed closing process not only completes the transaction but sets the foundation for successful ownership transition and your future financial security.”
What happens during this stage:
- Final purchase agreements will be executed
- Closing conditions will be satisfied
- Funds will be transferred
- Ownership will be officially transferred
- Transition period begins with potential training or consulting arrangements
- Your relationship with the business will be clearly defined (full exit, consulting role, earn-out period)
How BPM supports you:
- We help negotiate final terms to protect your interests
- We provide support through closing documentation and requirements
- We assist with transition planning to promote business continuity
- We offer Wealth management services to help you optimize and protect your sale proceeds
- We provide guidance on wealth management and financial planning for your proceeds
Where are you in your business sale journey?
Selling a business involves navigating through multiple stages, each with its own challenges and opportunities. Take this quick assessment to identify your current stage and get insights tailored to your situation.
Frequently asked questions
Every industry faces unique challenges
Discover how the business sale journey differs across sectors.
Technology
Navigating the sale of a technology business involves unique challenges where intellectual property valuation and rapidly evolving market conditions create a transaction environment requiring specialized assessment of digital assets.
Technology
Technology companies often derive their primary value from intangible assets such as proprietary software, patents, and technical expertise rather than physical infrastructure. This shifts the valuation focus toward metrics like monthly recurring revenue (MRR), customer acquisition costs, and user growth rates rather than traditional EBITDA multiples. Due diligence in tech acquisitions typically involves deeper scrutiny of the codebase quality, scalability of the technology stack, and potential technical debt that could affect future development costs. Buyers often bring technical teams to evaluate the architecture and may request access to GitHub repositories or development documentation.
The competitive landscape for technology acquisitions creates both urgency and opportunity. With large tech companies constantly seeking to acquire innovative solutions rather than build them internally, sellers often receive interest from strategic buyers willing to pay premium valuations based on potential integration benefits. However, this same rapid pace of innovation means that timing becomes critical—a technology that represents cutting-edge value today may become commoditized within months.
Successful technology exits frequently involve telling a compelling story about how the business is positioned to capitalize on emerging trends such as artificial intelligence, blockchain, or specific industry digitization, requiring sellers to frame their value proposition within the context of broader technological transformation.
closeBusiness & Professional Services
Transitioning ownership of business and professional service firms requires demonstrating consistent client retention and knowledge worker expertise, establishing a sale process where relationship transferability and service continuity become primary valuation drivers.
Business & Professional Services
Professional service businesses derive their value primarily from human capital and client relationships rather than physical assets or proprietary technology. During valuation, buyers focus intensely on metrics like client retention rates, average relationship tenure, revenue concentration, and the firm’s ability to cross-sell services. The due diligence process emphasizes reviewing client contracts, assessing employee retention strategies, and evaluating knowledge management systems that capture intellectual capital beyond individual relationships. Successful transactions often include carefully structured retention agreements for key personnel whose relationships and expertise are central to preserving business value.
The timing of professional service firm sales frequently coincides with partnership transition needs or strategic growth inflection points. Buyers—whether strategic acquirers seeking complementary capabilities or private equity firms pursuing platform investments—evaluate these businesses on their scalability potential and ability to maintain service quality with standardized delivery models. Transaction structures commonly incorporate earnout provisions tied to client retention metrics and employee continuity, acknowledging that the true value resides in relationships that must successfully transfer to new ownership. Post-closing integration requires delicate balancing between preserving the distinctive culture that attracts talent and implementing operational efficiencies that drive financial returns.
closeConsumer Business & Online Retail
The sale journey for consumer and online retail businesses centers on digital presence valuation and customer acquisition metrics, creating a transaction environment where brand loyalty and e-commerce capabilities significantly influence buyer interest.
Consumer Business & Online Retail
Consumer and online retail businesses face unique valuation challenges where traditional metrics meet digital performance indicators. Buyers carefully evaluate customer acquisition costs, conversion rates, and basket economics alongside conventional revenue and profitability measures. The strength of omnichannel integration has become particularly crucial, with premium valuations going to businesses that seamlessly connect physical locations, e-commerce platforms, and social commerce initiatives. During due diligence, potential acquirers scrutinize customer retention metrics, analyze purchasing patterns, and assess the robustness of the technology stack powering the shopping experience.
The competitive landscape for consumer business acquisitions has evolved significantly with the acceleration of e-commerce. Strategic buyers are increasingly willing to pay premium multiples for established online brands with loyal customer bases rather than building these capabilities internally. Timing becomes especially critical in consumer business transactions, as market perception and brand relevance can shift rapidly. Successful exits in this sector often involve comprehensive transition planning to maintain brand integrity and customer experience throughout the ownership change.
closeLife Science & Healthcare
Navigating the sale of healthcare and life science organizations involves complex regulatory considerations and intellectual property assessments, creating a transaction landscape where compliance history and innovation pipelines substantially impact acquisition value.
Life Science & Healthcare
Life science and healthcare businesses operate in a highly regulated environment where compliance history and future regulatory pathways critically impact valuation. Due diligence in this sector extends beyond standard financial reviews to include detailed assessment of clinical data quality, regulatory correspondence, reimbursement trends, and privacy compliance. For pharmaceutical and medical device companies, buyers meticulously evaluate patent portfolios and development pipelines, often structuring deals with milestone payments tied to regulatory approvals or commercial performance. Healthcare service providers face additional scrutiny around billing practices, quality metrics, and changing reimbursement models.
Strategic timing in healthcare transactions frequently aligns with regulatory shifts or market consolidation trends. Larger organizations increasingly acquire specialized providers to create integrated care delivery networks or enhance therapeutic area expertise. Digital health companies face unique valuation challenges, with buyers attempting to quantify the long-term value of health data assets and patient engagement capabilities. Post-acquisition integration in healthcare demands careful attention to maintaining quality of care and provider relationships throughout the transition, with successful buyers recognizing that preserving clinical excellence and patient trust ultimately determines whether the transaction achieves its intended value.
closeFintech
The path to selling fintech enterprises focuses on technology scalability and regulatory compliance frameworks, forming a transaction environment where user growth metrics and integration capabilities considerably affect purchaser enthusiasm.
Fintech
Fintech companies occupy a unique position at the intersection of financial services regulation and technology innovation, creating distinctive transaction considerations. Valuation frequently emphasizes customer acquisition efficiency, platform scalability, and the robustness of regulatory compliance frameworks rather than traditional profit metrics. Due diligence processes scrutinize the technology architecture for security vulnerabilities and scalability limitations while simultaneously assessing regulatory authorizations and compliance history. Buyers pay particular attention to data management practices, understanding that proper handling of financial information represents both a significant compliance requirement and potential competitive advantage.
The timing of fintech exits often coincides with fundraising cycles or regulatory inflection points as companies seek strategic partners to navigate increasingly complex compliance environments. Transaction structures frequently incorporate earnout provisions tied to user growth or revenue expansion, allowing sellers to capture additional value as the platform achieves greater scale. Strategic buyers—typically larger financial institutions or established technology companies—evaluate these businesses not just on standalone potential but on integration capabilities with existing systems and potential for accelerating digital transformation initiatives. Successful post-closing transitions require careful attention to maintaining regulatory compliance throughout the ownership change while preserving the innovation culture that initially drove the company’s technological advantages.
closeManufacturing & Distribution
Executing the sale of manufacturing and distribution businesses demands evaluation of operational efficiency and supply chain resilience, establishing a transaction process where physical assets and inventory management systems critically determine market value.
Manufacturing & Distribution
Manufacturing and distribution companies derive significant value from tangible assets and operational capabilities, creating transaction considerations distinct from service-oriented businesses. During valuation, buyers conduct thorough assessments of production efficiency, equipment condition, inventory management systems, and supply chain resilience. The due diligence process typically involves site visits to evaluate facility condition, equipment age, and maintenance practices alongside standard financial reviews. Environmental compliance history receives particular scrutiny, as undisclosed liabilities can significantly impact transaction value. For businesses with international operations, trade compliance and geopolitical risk factors introduce additional complexity to the transaction process.
The timing of manufacturing exits often aligns with capital investment cycles or industry consolidation trends. Strategic buyers—typically larger companies seeking vertical integration or geographic expansion—evaluate these businesses on potential synergies with existing operations and ability to enhance competitive positioning through increased scale. Financial buyers focus on operational improvement opportunities and cash flow stability, often bringing specialized industry expertise to identify efficiency enhancements. Transaction structures frequently address inventory valuation and working capital requirements, with detailed mechanisms for adjusting purchase price based on closing balances. Successful transitions require careful attention to maintaining customer relationships and preserving quality standards throughout the ownership change, with comprehensive planning to prevent service disruptions that could damage valuable customer relationships.
closeMeet our Transaction Advisory Leaders
Stay informed with the latest transaction advisory insights
Start the conversation
Looking for a team who understands where you’re headed and how to help you get there? Whether you’re building something new, managing growth or preserving success, let’s talk.