What does a due diligence attorney do in a business sale?

A due diligence attorney reviews all legal, financial, and operational records of the business on behalf of the buyer. They identify hidden liabilities, verify contract transferability, confirm regulatory compliance, and flag risks that could affect the deal terms or closing.

How long does due diligence take when buying a business?

Typically 30 to 60 days from the signed letter of intent. Complex transactions or SBA-financed deals may take longer. Well-prepared sellers with organized records can shorten the process significantly.

What documents do I need for due diligence?

Sellers should prepare 3-5 years of financial statements and tax returns, all contracts and leases, employee records, entity documents, litigation history, IP registrations, insurance policies, and a complete asset inventory.

Due Diligence in Florida Business Sales: What Your Attorney Reviews

What Is Due Diligence in a Business Sale?

Due diligence is the investigation and verification process that occurs after a letter of intent is signed and before closing. It is the buyer's opportunity to confirm that everything the seller has represented about the business is accurate, and to identify risks that were not disclosed.

For sellers, due diligence is the most scrutinized phase of the transaction. Incomplete records, undisclosed liabilities, or inconsistencies in financial data are the top reasons deals fall apart or prices get renegotiated downward.

Financial Due Diligence

Profit and loss statements (3-5 years) verified against tax returns
Balance sheets reviewed for accuracy and consistency
Cash flow analysis and working capital assessment
Accounts receivable aging and collectibility review
Accounts payable verification and outstanding obligations
Sales tax compliance and filing history
Debt schedule with payoff amounts and lien verification
Owner compensation and add-back analysis for SDE calculation

Legal Due Diligence

Entity formation documents and good standing verification
Operating agreement or bylaws review
All amendments, ownership changes, and resolutions
Business licenses and permits (current and transferable)
Complete litigation history and pending legal matters
UCC lien searches through Florida Department of State
Intellectual property registrations and ownership verification
Regulatory compliance review for industry-specific requirements

Contract and Lease Review

Customer contracts: terms, assignability, change-of-control provisions
Vendor and supplier agreements: pricing, exclusivity, termination rights
Commercial lease: assignment provisions, landlord consent requirements, remaining term
Equipment leases and financing agreements
Insurance policies: coverage, claims history, transferability
Government contracts and certifications (if applicable)

Operational Due Diligence

Employee roster with compensation, tenure, and benefit obligations
Employment agreements and independent contractor agreements
Non-compete and non-disclosure agreements with key personnel
Organizational chart and management structure
Standard operating procedures documentation
Customer concentration analysis (top 10 customers by revenue)
Asset and inventory list with current values
Technology systems and software licenses

How Long Does Due Diligence Take?

Most due diligence periods run 30 to 60 days from the signed letter of intent. The timeline depends on the business's complexity, the quality of the seller's records, and whether financing is involved (SBA lenders have their own due diligence requirements).

Sellers who prepare their documents in advance significantly shorten this timeline. At Barnes Walker, we help sellers organize their due diligence materials before going to market and help buyers conduct thorough reviews that identify risks before they become problems.

Related: How to Sell a Business in Florida | How to Buy a Business in Florida | How to Prepare for Sale

Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult with a qualified attorney before making decisions about your business transaction.