Is this due diligence checklist free?

Yes. The Acquidex Due Diligence Checklist is free to use, no signup required. It runs in your browser and surfaces deal-killing red flags before you commit to LOI.

When should I use a due diligence checklist?

Run a pre-LOI sanity check before you sign a letter of intent. Most expensive due diligence work — legal review, QoE engagements, lender packages — happens after LOI. Surfacing red flags before LOI prevents tens of thousands in dead-deal costs.

What does the sanity check cover?

Four areas: financial reality (revenue tie-out, add-back credibility, working capital), transfer risk (customer concentration, key-person dependency, lease/license transferability), operational dependencies, and legal red flags (litigation, licensing, unrecorded liabilities).

Does this replace formal due diligence?

No. The Acquidex checklist is a pre-LOI screening layer, not a substitute for legal review, formal QoE, or a CPA-led financial diligence engagement. It helps you decide which deals are worth taking to formal diligence and which to walk from.

Acquidex · Tool · Checklist · Pre-LOI Screen

Due Diligence Sanity Check · v1.0

Updated 2026-05-09

The pre-LOI sanity check.

40 structural diligence items every sophisticated SMB buyer should clear before signing an LOI. Each one is either a deal-killer or a price discussion. Run before paying for legal review or QoE spend.

Looking for a vertical-specific list? 11 industry checklists below →

Diligence progress

0 / 40 verified

Reconcile revenue to bank deposits
High risk
Reported revenue must tie to actual bank deposits over the trailing 12 months.
Cross-check P&L against tax returns
High risk
Seller-prepared P&L must match what the IRS sees on Form 1120/1120-S/1065.
Strip SDE add-backs to lender standards
High risk
Each add-back must survive SBA SOP 50 10 8 stripping — non-recurring, documented, not required to operate post-close.
Restore replacement-labor cost
High risk
An absentee owner being added back without a manager budget will fail SBA underwriting.
Confirm owner W-2 / officer compensation
High risk
Officer comp on the tax return is what add-backs are measured against.
Working capital trend (AR, AP, inventory)
High risk
AR shouldn't be aging, AP shouldn't be stretched, inventory shouldn't be becoming obsolete.
Seasonality and trough-month liquidity
Med risk
Monthly cash-flow swings determine the working capital peg and the post-close cash buffer.
Maintenance capex reserve
High risk
Maintenance capex must be reserved against cash flow — not optimistically excluded as "growth investment."
Gross margin and EBITDA-margin trend
Med risk
Compressing margins — even with growing revenue — signal pricing power loss.
Related-party transactions
High risk
Below-market rent to owner-held real estate, family payroll, and inter-company services hide the true cost structure.
Off-book / cash transactions
High risk
Unreported cash revenue cannot be financed by an SBA lender and exposes the buyer to tax risk.
Deferred revenue and prepayments
Med risk
Prepaid revenue is a working-capital obligation the buyer inherits.

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0/40

Items checked

High-risk pending

Verification

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Why pre-LOI

Most deals die after the LOI.

Running this screen before LOI saves thousands in legal fees and months of wasted time on deals that were never going to close.

Read the guide

§ 02 · By industry

checks

Open →

Each industry list is anchored to its current Industry Atlas issue and refreshes quarterly with the Atlas.

§ 03 · Trigger

When to run this sanity check.

01
Right after receiving a CIM or broker pack.
02
Before paying for QoE or legal billable hours.
03
When you need to kill weak deals fast and protect your time.
04
When a seller is pushing for LOI without basic proof of claims.

§ 04 · Reference

Frequently asked questions.

Is this the full diligence list?: No. It is the pre-LOI filter. It tells you whether the deal deserves full diligence spend.
Can I share this with a seller?: Yes. It often clarifies why you need specific documents early and speeds up responsive sellers.
Does it replace a QoE?: No. It prevents you from ordering QoE on deals that are already failing basic reality checks.

Reconcile revenue to bank deposits

Cross-check P&L against tax returns

Strip SDE add-backs to lender standards

Restore replacement-labor cost

Confirm owner W-2 / officer compensation

Working capital trend (AR, AP, inventory)

Seasonality and trough-month liquidity

Maintenance capex reserve

Gross margin and EBITDA-margin trend

Related-party transactions

Off-book / cash transactions

Deferred revenue and prepayments

11 vertical-specific checklists.

HVAC

Car Wash

Electrical

Landscaping

Plumbing

Roofing

Pest Control

Pool Service

Tree Care

Restoration

Laundromat

When to run this sanity check.

Frequently asked questions.