Once you’ve signed a Letter of Intent (LOI), the buyer will begin due diligence — a deep dive into your business to confirm that everything you’ve represented is accurate. Think of it as the buyer “lifting the hood” to make sure the engine runs as promised. This stage can feel intense, but with preparation, you can move through it smoothly and keep the deal on track.
What Due Diligence Really Means
Due diligence is the buyer’s way of verifying your agency’s financial, legal, and operational health. They want to confirm that:
- Your financials are accurate and consistent.
- Contracts with clients and candidates are valid and enforceable.
- Compliance with employment laws and regulations is in order.
- Operations, systems, and staff can continue running without disruption.
Typical Areas of Review
- Financial: Tax returns, profit and loss statements, balance sheets, accounts receivable/payable.
- Legal: Client and candidate contracts, leases, pending litigation, intellectual property.
- Operational: ATS/CRM systems, documented processes, employee handbooks, compliance procedures.
- HR & Staffing: Employee agreements, benefits, turnover data, and contractor compliance.
How to Prepare
- Organize Documents Early: Create a secure “data room” (digital folder) with all key documents.
- Clean Up Contracts: Make sure client and candidate agreements are current and signed.
- Resolve Issues in Advance: Address any outstanding legal or compliance matters before diligence begins.
- Keep Performance Steady: Buyers want to see that revenue and operations remain consistent during the review period.
Common Red Flags
- Inconsistent or incomplete financial records.
- Heavy reliance on one or two clients for most revenue.
- Unresolved lawsuits or compliance violations.
- High employee turnover without a clear retention plan.
Your Next Step
- Work with your broker, attorney, and CPA to prepare a due diligence checklist.
- Begin gathering documents now, even if you’re not ready to sell immediately.
- Remember: preparation reduces stress, shortens timelines, and builds buyer confidence.
At SAB, we guide staffing agency owners through due diligence by helping organize documents, anticipate buyer questions, and resolve issues before they become deal‑breakers. Our experience — and our database of qualified buyers — ensures that you move through this stage with clarity and confidence.
Next in our series → Deal Structures & Financing Options
