Due diligence is the work a reviewing party does to test whether your business is what you say it is. It is used in lending, acquisitions, investments, partnerships, major vendor onboarding, franchising, and sometimes insurance or licensing. The difference between being profitable and being review-ready is the difference between a good year and a file someone else can trust.
How to prepare for a due-diligence request
Assume the first request list will be broad and the second will be sharper. Prepare corporate records, financials, tax filings, contracts, employment materials, IP assignments if relevant, litigation, insurance, licenses, debt, and a customer/vendor overview with concentration. Then organize a data room with names a stranger can understand: “04-Material-Contracts,” not “Joe’s stuff.”
Common red flags
- Missing documents that should exist for a company of your size
- Numbers that do not reconcile across reports
- Undisclosed related-party deals
- Customer relationships with no written terms
- Slow or inconsistent answers, which reviewers treat as concealment
Due diligence is not the time to start organizing your documents. Missing documents create deal risk. How you respond to a request — complete, dated, and indexed — is itself a diligence fact. Our Due-Diligence Preparation service exists so the first Monday of a process is not a scavenger hunt.