How to Prepare For Due Diligence

Welcome back to another edition of The Wise Exit newsletter! This week, we’re covering:

• How to stay ahead of due diligence so your deal doesn't fall apart

• 5 questions to help you stress-test your due diligence readiness

• 3 tactical steps to keep momentum during the most intense part of the sale process

Let’s dive in.

💡 One Big Idea

How to Prepare For Due Diligence (So Your Deal Doesn't Fall Through)

You've decided to sell your business. You’ve made it past LOI, you’re finally talking to serious buyers, and it feels like you're just inches away from the goal line at this point.

But now comes the part that separates the prepared founders from the rest:

Due diligence.

Because once you reach this stage, buyers will start digging into every small aspect of your business — financials, legal docs, operations, tax returns, customer contracts, employee agreements. All of it.

Truth is, every founder says they’re ready. But in reality, very few actually are.

You see, due diligence isn’t just a formality. It’s where buyers confirm whether they trust you and your business.

One misstep, delay, or inconsistency, and a buyer will start to second-guess.

So if you want to maximize your chances of success?

Prepare well in advance before you're ready to exit:

• Proactively address red flags

• Organize 3–5 years of financials

• Work with advisors to make sure every doc checks out

Because the fastest way to lose a business deal is to reach the goal line, only to realize you aren't prepared to cross it.

Your Action Items:

1. Compile your core documents now, not later: At a minimum, you should have P&Ls, tax returns, org charts, cap tables, customer/vendor contracts, and employee agreements.

2. Audit for red flags in advance: High churn, lumpy revenue, high customer concentration, unassigned IP — these are all things that will come up during due diligence. Address them before the buyer does.

3. Set expectations with your internal team: Due diligence can take 30–60 days. It’s an intensive process. So make sure your leadership team is prepared for questions, document requests, and last-minute fire drills.

Want the due diligence prep guide we share with all our clients? Just reply to this email, and I'll send it your way.

❓ 5 Key Questions to Ask Yourself Today

Before you even think about an exit or talk to a buyer, there are several important questions you should be asking yourself.

The five questions below are anything but easy to answer. In fact, they'll challenge you to think about things you may never have before. But they could be the difference between a clean and confident exit, or one you wish you could take back:

1️⃣ If a buyer scrutinized your last 3 years of financials, how confident are you they’d hold up — without needing edits, disclaimers, or explanations?

This isn’t just about having the files. It’s about whether the numbers tell a story you’re proud of under a microscope.

2️⃣ Where would a buyer find “deal fatigue” in your business? Things like gaps, inconsistencies, or areas that slow things down or raise new questions.

The longer diligence drags on, the more nervous buyers get. Clarity and speed are your best defenses.

3️⃣ If a buyer’s CFO stress-tested your customer base, cost structure, or margin trends, what patterns would make them pause?

Due diligence isn't just about what’s true. It's about what trends suggest will happen next.

4️⃣ Can someone outside your business easily match what your data says with what your story claims?

Narrative is powerful, but only when it’s backed by proof. Any gap between pitch and paper erodes trust.

5️⃣ What’s one area of the business you hope a buyer doesn’t look too closely at, and why haven’t you fixed it yet?

If you're crossing your fingers it won’t come up, chances are it will.

📋 3 Action Items For This Week

☑️ Start building a due diligence folder in your data room: Include your last 3–5 years of financials, contracts, and tax filings. Build the habit of keeping it updated every few months.

☑️ Ask your CPA to flag anything a buyer might question: They’ve seen what raises eyebrows. So get their input now, not during the fire drill.

☑️ Block time to walk through your numbers with a third party: Whether it's a banker, advisor, or operator you trust, have them pressure-test your data and story.

That’s all for this week.

Remember, due diligence doesn’t need to be painful. But it does need to be prepared for.

The more you tighten things up now, the faster and cleaner your deal will move when the time comes.

If you want help thinking through where your blind spots might be, just reply to this email. I'm always happy to help.

Until next time,

Brian Dukes
Managing Partner at Exitwise