Last updated: 2026-04-13
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Due diligence is the 60-90 day investigation period where buyers verify your business’s financial records, customer contracts, employee details, and operational systems. Expect 3-5 buyer teams requesting 200-400 documents, conducting facility visits, and interviewing key staff. Your role is providing organized access to records while your advisor protects sensitive information. Most deals don’t proceed to close without clearing major findings—typical issues include unwritten service agreements, undocumented payroll practices, or revenue concentration with 2-3 customers.
Financial Due Diligence (30-40 days)
Buyers hire accounting firms to audit 3-5 years of tax returns, P&L statements, and bank statements. They verify EBITDA (earnings before interest, taxes, depreciation, amortization)—the metric that determines your sale price. In home services, they scrutinize job costing, warranty reserves, and customer acquisition costs. Expect questions on one-time expenses, related-party transactions, and revenue recognition timing.
Legal Due Diligence (30-40 days)
Legal counsel reviews contracts, licenses, litigation history, and compliance. For home services: service agreements with customers, employment contracts, vendor agreements, and licensing documentation (HVAC certifications, electrician licenses, plumbing bonds). They identify missing contracts—many service businesses operate on handshake deals with major accounts. This is the phase where undocumented relationships surface.
Operational Due Diligence (45-60 days)
Operational teams visit job sites, review scheduling software, inspect equipment and vehicles, and interview technicians and office staff. They assess service quality, safety protocols, customer satisfaction data, and whether processes are repeatable (critical for PE buyers). They’ll identify if the business depends on the owner-operator or if it can function independently.
Commercial Due Diligence (30-45 days)
Market experts validate your customer base, pricing, market share, and growth assumptions. They conduct customer calls (with your permission) to confirm satisfaction and contract terms. In home services, they examine customer concentration—if your top 5 customers represent more than 25-30% of revenue, that’s a red flag that may reduce valuation or trigger earn-out provisions.
Start organizing documents now, before you list. Buyers move faster and offer higher multiples when financial records are clean and accessible. Identify any weak spots early—unwritten customer contracts, concentration issues, or compliance gaps—so you can address them before the process. Working with an M&A advisor like CT Acquisitions means having someone manage document requests and protect confidential information while you run the business.
60-90 days is standard for home services businesses. Financial and legal work happens in parallel with operational and commercial reviews. Timeline depends on document organization and buyer complexity. Disorganized records can extend this to 120+ days, delaying closing and creating deal risk.
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About the Author
Christoph Totter is the founder of CT Acquisitions, a buy-side partner headquartered in Sheridan, Wyoming. We work directly with 76+ buyers — search funders, family offices, lower middle-market PE, and strategic consolidators — including direct mandates with the largest home services consolidators that other intermediaries can’t access. The buyers pay us when a deal closes, not the seller. No retainer, no exclusivity, no contract until close. Connect on LinkedIn · Get in touch