Due diligence is the buzzword for the process where the buyer and seller verify information about each other.
It usually takes from 30 to 60 days. The buyer has the most checking to do since all of the significant company records need to be verified. Due diligence could include a formal audit by a CPA firm. The buyer or buyer agents will want to look at a whole host of documents. I have found it beneficial to ask the buyer for a list of documents and to assign responsibility and establish a schedule for producing each document.
As seller, you will want to check out the buyer’s history, résumé, credit characteristics and source of funds. Even if you get all cash at the closing you want to make sure the buyer has the ability to make your business continue to prosper.
I have never seen a seller who wasn’t interesting in the future of the business, even after giving up ownership. The seller is concerned that customers, suppliers and employees continue to be treated fairly.