Due diligence rarely kills a deal outright. It slows it down, and a slow deal gives the other side time to lower the price, add conditions or move on. Most of those delays trace back to work that could have been done months earlier: revenue that does not reconcile, contracts nobody can find, and a close that takes three weeks.
This is the six-month plan we run with companies ahead of a sale or a large raise. It assumes a part-time effort from your finance team plus outside support, and it works backward from the day the data room opens.
What buyers and investors ask first
Whether the other side is a strategic buyer, a private equity firm or a growth investor, the first requests look similar:
monthly financial statements for the last two to three years, closed on an accrual basis;
a revenue build by customer and product that ties to those statements;
a top customer list with contract terms and concentration;
an adjusted EBITDA or cash burn bridge, with support for every adjustment;
a monthly net working capital analysis.
Everything in the plan below exists to answer those requests quickly and consistently. Tax and legal diligence run alongside it and are handled with your licensed advisors.
Revenue and contracts (months 6 and 5)
Month 6: revenue recognition and deferred revenue
Review how revenue is recognized against your contracts and your ASC 606 policy, with your accountants or auditors confirming the policy itself. Then reconcile billings, recognized revenue and deferred revenue for every month in the diligence window. The test is simple: the change in deferred revenue should equal billings minus recognized revenue, month by month. Where it does not, find out why now, while you control the timeline.
Month 5: contract cleanup
Collect a signed, final copy of every customer contract, order form and amendment. Build a contract summary with start and end dates, renewal terms, pricing, discounts and termination rights. Flag change-of-control and assignment clauses for counsel to review. Side letters and verbal commitments either go in writing or come out of the forecast.
Concentration and a quality-of-earnings dry run (months 4 and 3)
Month 4: customer concentration
Calculate revenue share for your top one, five and ten customers in each of the last three years. If one customer is above roughly 10–15% of revenue, expect questions about renewal risk and pricing power. Prepare the answer in advance: contract length, relationship history, expansion trend, and what happens to margins if that customer leaves.
Month 3: quality-of-earnings dry run
A buyer’s quality-of-earnings team will rebuild your EBITDA from the general ledger. Do it first. List every adjustment you plan to claim, such as one-time legal costs, founder compensation above market or a discontinued product line, and attach support for each one: invoices, contracts, board approvals. Adjustments without documents typically get rejected, and each rejection lowers the earnings figure the price is built on.
Working capital, controls and close (months 2 and 1)
Month 2: working capital
Build a monthly net working capital schedule for the last 24 months: receivables, inventory where relevant, prepaid expenses, payables, accruals and deferred revenue. Understand your seasonality and your DSO trend. Buyers will propose a working capital peg based on a trailing average, and knowing your own number before they do protects value at closing.
Month 1: controls and close
Tighten the close to five to ten business days, run from a written close calendar. Reconcile every balance sheet account monthly, with a named reviewer who signs off. Document who approves payments, journal entries and vendor changes, and separate those duties where headcount allows. Then load the data room with the outputs of months 6 through 2, organized so each of the first requests above has one obvious file.
If six months is not available, run the same plan in compressed order: revenue reconciliation first, then the quality-of-earnings dry run, then working capital. Those three carry most of the valuation risk. This week, ask one question: can you tie last year’s recognized revenue to billings and deferred revenue, month by month? If the answer is no, month 6 has already started.
Written by
Daniel Rowe
Partner, Transactions
Daniel Rowe leads the firm’s transaction work: fundraising support and M&A / exit readiness. He spent the first part of his career in investment banking at a middle-market advisory firm, working on sell-side processes for founder-owned companies, growth capital raises and buy-side diligence. Across that period he worked on more than 40 closed deals.
He joined Maren in the firm’s first year to build its transaction practice. Today he runs quality of earnings dry runs, working capital analysis and data rooms for clients preparing to raise or sell. He works alongside each client’s counsel and licensed advisors, who handle legal terms and securities matters.
