Quick Due Diligence Checklist - The Blueprint System

80% of what matters in 20% of the time. This checklist catches the deal killers fast so you don't waste weeks on bad deals.

⏱️ Time Allocation:

Hour 1: Financial Verification (The Money Test)
Hour 2: Customer & Revenue Analysis (The Future Test)
Hour 3: Operations Review (The Systems Test)
Hour 4: Legal & Risk Scan (The Sleep Test)

HOUR 1: Financial Verification ⏱️

Bank Statement Test (20 minutes)

□ Match last 3 months deposits to reported revenue

□ Flag any deposits over $10K - ask what they're for

□ Calculate actual monthly revenue average

□ Look for NSF fees or bounced checks

RED FLAG: If bank deposits are 20%+ lower than reported revenue, walk away.

Tax Return Reality Check (20 minutes)

□ Compare last 2 years business tax returns to P&L

□ Look for Schedule C vs corporate return

□ Check for aggressive deductions that won't continue

□ Note any year-over-year revenue changes >20%

Expense Audit (20 minutes)

□ List top 10 expenses by amount

□ Circle any that seem personal (car payments, meals, travel)

□ Calculate true operating expenses

□ Flag any expenses that will increase (rent, insurance)

QUICK WIN: Add back personal expenses to EBITDA. I typically find $50-100K in personal stuff.

HOUR 2: Customer & Revenue Analysis ⏱️

Customer Concentration Check (30 minutes)

□ List top 10 customers by revenue

□ Calculate % of revenue from top customer

□ Calculate % of revenue from top 5 customers

□ Ask how long each has been a customer

□ Get contact info for top 3 (you'll call them)

DEAL KILLER: If any single customer is >30% of revenue, extremely risky.

Revenue Quality Test (30 minutes)

□ Calculate % recurring vs one-time revenue

□ Review last 12 months for seasonality

□ Count active customers vs total customers

□ Check average customer lifetime (years)

□ Note any pending contract renewals

HOUR 3: Operations Review ⏱️

Key Employee Assessment (30 minutes)

□ List all employees with salaries

□ Circle anyone making >$75K

□ Ask who would run business if owner disappeared

□ Check how long key employees have been there

□ Ask about any family members on payroll

NEGOTIATION LEVER: If no clear #2 person, reduce price by $50-100K for "transition risk"

Systems & Processes Check (30 minutes)

□ Ask to see operations manual (they won't have one)

□ Check what software they use (QuickBooks? CRM?)

□ Review how they track leads and sales

□ Ask about customer complaints process

□ Test: Could a new manager run this tomorrow?

HOUR 4: Legal & Risk Scan ⏱️

Legal Landmines (20 minutes)

□ Any lawsuits in last 5 years?

□ Workers comp claims?

□ Check Better Business Bureau rating

□ Google "[Business Name] lawsuit" and "[Owner Name] lawsuit"

□ Any regulatory violations?

Contract & Lease Review (20 minutes)

□ Building lease terms and transferability

□ Equipment leases or loans

□ Any personal guarantees?

□ Customer contracts - are they transferable?

□ Vendor agreements and terms

The Skeleton Check (20 minutes)

□ Ask: "What would you fix if you were buying this?"

□ Ask: "What keeps you up at night?"

□ Ask: "Any unhappy customers I should know about?"

□ Ask: "Any employees planning to leave?"

□ Ask: "Anything else I should know?"

PRO TIP: Ask this last question 3 times. The real truth comes out on the third ask.

The Go/No-Go Decision Matrix

Count Your Red Flags:

✅ 0-1 Red Flags: Full speed ahead
⚠️ 2-3 Red Flags: Proceed with heavy price reduction
🛑 4+ Red Flags: Walk away, not worth the headache

The Million Dollar Question List

Next Steps After Your 4-Hour Sprint

Remember: This quick sprint catches 80% of deal killers. The full due diligence (Document #24) is for after LOI signing.

The 4-Hour Due Diligence Sprint