Due Diligence at the time of buy and sell of practice or sale of business always varies from buyer to buyer. How not to start the due diligence: “Hello, my name is xxxxx. Can I please see your top revenue generating client files and your income tax returns from the last three years?”

Buyer can ask variety of questions. Inquiring about practice or business structure and clientele usually provide majority of the information buyer of the practice needs. Some summary reports that give you additional perspective are appropriate in some cases as well (Summary report of excel file). An example would be a receivables aging analysis (without client names.) Before an agreement is ever drafted, please assume for the time being that the answers and information provided by the seller of practice or seller of business are accurate and complete. Buyer should get all the information that is necessary to be able to make an informed offer. 

Once an agreement has been successfully completed, you will then begin phase 2. The purchase agreement should include a condition to carry on due diligence. It is usually referred to as “verification stage” of due diligence. Essentially, this is where the buyer will be verifying that the data produced in phase one is accurate and complete. At this stage the buyer can request more sensitive documents such as bank statements, tax returns, sample files, etc.