Due Diligence Checklist Creation

Let’s say you’re a newly hired Third-Party Risk Analyst at a mid-sized healthcare company. During your onboarding, you realize that while they have dozens of vendors handling sensitive patient data (think billing companies, cloud services, and telehealth providers), they have no formal third-party risk assessments documented. First, you would start by building a basic Third-Party Inventory. You’d gather a list of all vendors, what services they provide, and what kind of data they have access to. You would focus on vendors that touch patient records (Protected Health Information, or PHI) because HIPAA requires stricter handling for that kind of data. Next, you would create a simple vendor risk rating system. For example, any vendor handling PHI = High Risk, vendors with financial data = Medium Risk, vendors with only public data = Low Risk. You’d organize vendors into those categories so leadership can prioritize attention. Then, you would prepare a basic Due Diligence Questionnaire to send out. It would ask things like: • Do you encrypt PHI data in transit and at rest? • Do you have a current SOC 2 report? • Have you had any breaches in the last 12 months? After collecting responses, you would review them and flag any vendors who seem high-risk (like no encryption, no audit reports, or recent breaches). You’d recommend follow-ups, like contract updates, requiring security improvements, or even switching providers if needed. Finally, you would propose setting up a recurring third-party review schedule — maybe every 6 or 12 months — so that vendor risk stays managed continuously, not just one time.

In M&A, most sellers assume diligence begins 𝙖𝙛𝙩𝙚𝙧 the LOI is signed… But by that point, the clock is already ticking, exclusivity is locked in, and any surprises (real or perceived) can become deal-breakers or issues that chip away at price. The truth is, buyers walk in with a very specific checklist. They’re not just verifying financials, they’re looking for risks, for inconsistencies, and sometimes, for anything that gives them leverage, or even a reason to walk away. Here’s the good news: if you’re the seller, you can beat them to it. It starts with understanding what buyers are looking for: 🔎 HR and compliance gaps 🔎 Messy or incomplete contracts 🔎 Unclear financial adjustments or owner add-backs 🔎 Potential unresolved tax liabilities 🔎 Customer concentration risk 🔎 Unresolved litigation or contingent liabilities 🔎 Cap table confusion or unresolved equity promises These aren’t just technical details, they’re signals to the buyer, and in an M&A process, well-prepared diligence wins deals. What can sellers do? ✅ Assemble your own diligence checklist before buyers do. A good M&A advisor will help you do this during the preparation phase ✅ Have your financials reviewed or normalized by a third-party QofE provider ✅ Clean up contracts, org charts, cap tables, and compliance documentation ✅ Identify “gray area” risks early and prepare thoughtful explanations ✅ Think like a buyer, then remove any friction. Make it easy to buy your company. In diligence, the goal isn’t perfection, it’s being able to give the buyer confidence. When a buyer feels like you’ve done your homework, the dynamic shifts. You’re no longer defending surprises. You’re leading the deal with transparency and strengthening the value you’ve worked so hard to build. #mergersandacquisitions #Investmentbanking #MandA #exitplanning

"You’re the first developer to ever show me this." Here's why investors wire $100K+ checks: A few weeks ago, I was on a call with an investor walking him through one of our JV deals. When he said that...I was honestly shocked. I didn't share anything groundbreaking about the deal. It was just real due diligence. But he was used to the pitch that 99% of GPs make. They show up with: • An excel pro forma • A list of Zillow comps • A contractor estimate (maybe) • A pretty pitch deck full of renderings That might impress retail investors. But institutional capital is underwriting your risk, not your pitch deck. Here’s what we include before we ever ask someone to write a check: 1. Verified Demand • Third-party market studies (not your broker’s gut feeling) • Local appraisal comps, absorption rates, vacancy trends • Cost: $2K–5K • Outcome: "Here’s proof this thing will lease or sell." 2. Construction Cost Validation • At least two contractor bids • Plus a 3rd-party estimator using RS Means and local data • Outcome: "We’re not guessing at $312/sq ft — we’ve confirmed it." 3. Environmental Phase I • Wetlands, soil, stormwater — all flagged early • Cost: $3K–8K • Saved us $500K+ on one site that would’ve been a disaster 4. Utility & Infrastructure Assessment • Where’s power coming from? • Can the site support septic or sewer? • How much is it to extend water lines? • These “hidden” costs add $50K–$200K fast 5. Regulatory Risk Map • What’s the timeline for entitlements? • Any NIMBY patterns in council meetings? • Are similar projects getting approved or denied? 6. Stress-Tested Financials We model every deal three ways: → Base case (what we expect) → Conservative case (costs up, delays hit) → Disaster case (soft demand + rate spikes) Why spend time and money on the extra due diligence? Because investors don't care about your deck; they care about YOU the operator and how prepared you are. Anyone can show a well-designed deck. But the thing that creates real relationships and repeat investors: do your due diligence, even if it costs you more on the front end. This is the difference between “looks good on paper” and “let’s wire funds.” Is due diligence part of your competitive advantage? -- If you own land and are looking for a partner to help you develop it, reach out to connect. Eugene Gershman

A Business Buyer’s Due Diligence Checklist ✔️ May not be everything needed for every deal, make sure to work with professionals! ✔️ Teaser: Overview of a company and its financial performance ✔️ NDA: “Non-disclosure Agreement” Ensures confidential information about business is not shared. ✔️ CIM: "Confidential Information Memorandum" provides all the details about the target company. Includes an Executive Summary, Financials, Company History, maybe industry/location info. ✔️ LOI: “Letter of Intent” Non-binding offer to buy the company, and preliminary details of the deal structure. Also includes due diligence period, target closing date, and exclusivity. ✔️ Management Meetings: Video or On-site meet with the Seller, and sometimes key employees. ✔️ Quality of Earnings (QofE) Report: Evaluation of the target company's financials to ensure the financials are accurate. Done by a 3rd party, usually a CPA. ✔️ Operations and Technology Review: Detailed review of the Employee List, Vendor List (and lines of credit), Client List, SOPs, Employee Handbooks, Employment Contracts, Independent Contractor Agreements, etc. Complete list of all software, social media, email, and website accounts and passwords. ✔️ Management Team and HR: Evaluate the target company's management team and human resources to ensure alignment with acquirer. ✔️ Legal and Regulatory Compliance: Evaluate the target company's contracts, terms of service, engagement letters, tax filings, corporate filings, and licenses. ✔️ Ownership Transition Plan: Design/Review the plan for operating the company post-closing. (Typically 30-60-90 day plan) ✔️ Finalize Deal Structure: Determine the final deal structure and terms based on the results of the due diligence process (should hopefully match LOI). ✔️ Close Deal: Complete the transaction and transfer ownership of the target company to the Buyer Some big surprises I’ve seen: ⚠️ Don’t forget Accumulated Employee Paid-Time-Off (PTO) ⚠️ Vendors may not offer the same Line of Credit amount/terms to a new owner - adjust working capital ⚠️ Employees may be paid less than market rate, and buyer incurs the cost of leveling salaries ⚠️ Annual Service Agreements the Buyer must fulfill without receiving revenue ⚠️ Un-filed State Sales or Employment Taxes passed on to the Buyer Need help with your deal? DM me 📩 ~~ #dealmakers #businessbroker #MandA #Entrepreneurship #DueDiligence

Before buying a retail center, we run a 140-point checklist. Our due diligence checklist runs 140 items deep because in retail, the risk isn’t just “what you buy today.” It’s the tenants, leases, and local demand that will make or break the next 5–10 years. Some of the line items are simple admin: - Create the entity - Verify insurance - Confirm lender requirements But the real value is in the operational checks: - Who are the current tenants, and who are the guarantors? - Are they creditworthy? - What’s missing from the market? (Too many sandwich shops? Not enough fitness or medical?) - Which uses complement each other and drive traffic across the center? - What tenant improvements will be required to fill the vacancies? - Which tenants USED to occupy the center? - What’s the realistic timeline to lease-up based on local demand, not just a spreadsheet assumption? This is the stuff you won’t see in a pro forma, but it’s exactly where the investment is won or lost in retail centers. Because when you close, you’re not just buying the rent roll. You’re buying the problems you’ll need to solve. And the checklist is where you find out whether those problems are solvable, before investor capital is on the line. What are the most essential items on your due diligence checklist before investing?

“We’re good. We’re just waiting on signatures.” Famous last words of Q4. 1️⃣ The Problem Big companies run on process. Procurement, legal, finance, IT security all have their own steps and gates. But most sellers run on hope. They think the deal will close because the buyer “said yes.” Except saying yes isn’t the same as being ready to sign. 2️⃣ The Negative Impact The gap between hope and evidence is where deals die. Forecasts slip. Reps miss quota. Leaders lose credibility with the board. The worst part?  The deal often could have closed if someone had just seen the red flags sooner. 3️⃣ What Typical Sellers Do They manage from memory. They assume each step is done. Then on December 28th, they realize: → Legal hasn’t redlined. → Security hasn’t approved. → The EB’s OOO until next year. Cue panic, discounts, and “just following up” emails. 4️⃣ What Elite Sellers Do Elite sellers trust systems, not feelings. They de-risk deals with the same discipline a pilot uses before takeoff. They run through an evidence-based checklist every week. If something’s missing, they fix it fast. No surprises.  5️⃣ The Solution: The Closing Checklist To paraphrase Blake from Glengarry Glen Ross: Put that hope down.  Checklists are for closers. Inspired by The Checklist Manifesto, I embedded a Closing Checklist directly inside Salesforce. Every deal gets scored: ✅ Yes = solid evidence ⚠️ Partial = work in progress ❌ No = at risk There’s no debate. Either you have it, or you don’t. When sellers and managers review deals, they have direct, evidence-based conversations.  Managers coach reps on closing gaps, not discussing feelings. 6️⃣ How It’s Implemented There are two main questions and ten checklist items: Do we even have a deal? ✅ Selected: We are the officially selected partner (in writing) ✅ Commercials: Price/terms agreed in principle ✅ EB Approval: Economic Buyer sign-off captured (email or doc) Can we close it by EOQ? ✅ MAP: Updated Mutual Action Plan with owners & docs ✅ Compelling Event: Fixed date driving signature this quarter ✅ Legal: Counterpart assigned; template shared; timeline agreed ✅ Procurement: Counterpart assigned; process & steps mapped ✅ Agreement: Our MSA shared; buyer has returned first redlines ✅ Approvers: Finance/IT/Security/Execs listed with required steps ✅ Availability: OOO dates for all signers/approvers The result: - Fewer “surprise” misses - More predictable closes - Higher confidence forecasts 7️⃣ Closing Enterprise sales isn’t about feelings. It’s about disciplined execution. Closing Checklists foster discipline. 8️⃣ To Learn More 👇 Drop “Checklist” in the comments and I’ll reply with an ungated link to it. 🔍 Score one of your Q4 deals against this criteria and let me know if it helped you.