Navigating Due Diligence

A Guide For Sellers

Published May 2025

“I’ve run my own business successfully for 20 years and now it feels like someone is marking my homework.”

Prospective sellers often tell us that due diligence is the part of the sale process that they look forward to the least. That doesn’t need to be the case. Managed properly, it can be a positive experience.

We’ve helped over 50 owners successfully navigate through due diligence in the last two years and sell their accounting practices. Here’s a guide to help future sellers.

What is Due Diligence?

Due diligence is the investigation by the buyer of the practice being acquired to support the price being paid, and evaluate its financial health, legal compliance, and potential risks. This process typically involves gathering and analysing information, asking questions of the seller and reviewing a sample of client files.

What Can Go Wrong

In a well-run sale process, due diligence should be a validation of what the buyer has already read about the practice (via the Information Memorandum) and been told (by the seller and the broker).

The due diligence process can unravel when the buyer discovers things that they weren’t expecting. This can lead to either a re-negotiation of the commercial terms or even the sale process being terminated.

When Does Due Diligence Occur?

In a DMY-run sale process, only one party performs due diligence and only when there is an executed Heads of Agreement with the key commercial terms agreed (subject to that due diligence).

The period of due diligence is also time-boxed with an agreed start and end date to keep the process efficient.

Anecdotally we hear that due diligence in a direct sale (without the involvement of a broker) often occurs much earlier in the sale process and can extend for months. This is not recommended.

Who Decides The Scope?

The level of information requested by buyers will vary on a deal-by-deal basis reflecting a range of factors including:

The sale structure (e.g. goodwill versus entity sale)
The acquisition experience and risk appetite of the buyer
The size and complexity of the practice being sold
The price being paid

Common Requests by Buyers

The following list is not intended to be exhaustive, and individual buyers may request additional items but here are some of the common requests that we see:

General information about the practices, its licensing and registrations
Financial and client information to support the fees being sold and future risks
Billing practices and pricing structures
People information including employment agreements
Operations, systems and processes
Material agreements including leases
Any pending or past litigation, disputes, or compliance issues
ATO lodgement information
Aged WIP and debtors

..and more (particularly if the structure is an entity sale).

How DMY Supports Clients

Supporting our clients through every step of the sale process is an integral part of the service we provide to sellers. Helping them navigate through due diligence is no exception.

Our work in this areas begins long before the due diligence process kicks off with the production of a high quality, fact based Information Memorandum so the buyer already has a good understanding of the practice they are buying.

We then offer our clients a checklist of common due diligence requests so they they can get prepared ahead of time.

Once due diligence kicks off with the preferred buyer, we review information requests from the buyer to see what is reasonable and what is not. We also help facilitate the due diligence process and ensure it is efficient for all parties.

Finally we get involved if there are any issues arising that mean the commercial terms need to be revisited (less than 10% of the time).

Final Thoughts

Due diligence is a key element of any sale and cannot be avoided. Being prepared, working collaboratively with the buyer, staying focused on the end goal, and engaging an expert to support them, can all help a seller navigate through this important stage and turn the experience into a positive.

Contact Us

If you are thinking about selling and want to discuss the due diligence process, and all the other key issues relating to the successful sale of your practice, reach out to us below:

Mark Emney

Director

Mobile: 0434 079 530
Email: mark@dmyassoc.com.au

Daniel Jones