How long does typical financial due diligence take?

by an investor from Columbia University - Columbia Business School

9 months ago

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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professional from The University of Texas at Austin - Red McCombs School of Business

Yes, that's enough time. DM if you have more specific questions about timing and sequence so you spend only what you need it.

7 months ago | like reply | 0 likes

professional from James Madison University

45 days is plenty of time. Assuming there are no capacity constraints. I've completed comprehensive financial due diligence workbook and report in a little as 10 days. PM for more details or for copies of recent reports.

9 months ago | like reply | 0 likes

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