Congratulations! You just signed an LOI. Maybe it was a few hours ago or maybe last night. Within the first hour, or hours, of putting your name on the dotted line you might be asking…
“Now what?”
You’re likely divided between the excitement of finding a business you’d love to acquire and anxious thoughts wondering what could still go wrong.
That’s normal. Your attention is better spent on what comes next and making sure checking the right boxes puts those anxious thoughts at ease.
The next week matters more than most buyers realize. A few small, practical moves now will save you real time later. You don’t need to have a full data room built or a binder of financials ready. You mostly need to make a few calls, set a few expectations, and let the right people know what’s coming.
Here’s what that actually looks like.
What to Do in the First Week
Do a light pass of your own diligence, if you have the bandwidth.
This isn’t a requirement, and a quick personal scan won’t replace a real QoE. But if something is going to be an obvious problem, like a customer concentration issue, a number that doesn’t add up, or a structure that feels off, it’s worth knowing that as early as possible, ideally before you’re paying a firm to find it for you. Think of it as a gut check just to be sure you’re on the right path.
Let the seller and broker know a QoE firm is coming.
This is the single most useful thing you can do in the first week, and it costs you nothing.
Once a diligence firm is engaged, document collection becomes their job. With Rapid Diligence specifically, that collection work starts in earnest about a week after the LOI is signed.
The seller and broker may not know to start pulling things together until someone tells them, though.
A short note along the lines of “we’re engaging a diligence firm in the next few days, and they’ll likely ask you to start putting together a data room” gives everyone a head start so that the whole process can move more quickly.
Start gathering what you already have, even though you don’t technically need to.
You’re not expected to assemble a clean document package before engaging with us, for example. That collection process is built to happen after engagement. But if you already have some of these on hand, having them ready will move things along faster once the formal requests start:
- Profit & loss statements
- Bank statements
- Credit card statements
- Tax returns
For the P&L it’s ideal to see data on a monthly basis for at least the last 12 months, but ideally the last couple of years.
We also make sure to look at any documents you already have so we’re not double-requesting them. If you already have these, it does help move things along, and we do move them into our own data room so we’re not duplicating requests.
Loop in the right people sooner rather than later.
The seller and broker are the ones you and the diligence team will be coordinating with most closely during diligence, since they’re the ones fulfilling document requests. Your lender, attorney, and tax accountant are worth notifying too, even if their involvement ramps up more gradually. Timing is the part that actually matters here: you want these key people aware that you are going to or are about to engage with a diligence firm so they have an idea that they will need to supply important information about the business and deal.
What Diligence Will Actually Cover
Knowing what’s coming makes the requests that follow feel a lot less like a fishing expedition and a lot more like a systematized process.
At the core, diligence is about answering one question: are the numbers the seller has presented actually real, sustainable, and accurately reflective of how this business performs?
That means digging into the P&L, the bank and credit card statements, and the tax returns to verify that revenue and expenses are what they appear to be, then identifying anything that needs to be adjusted, reclassified, or explained before you sign on the dotted line. It is a way to verify the numbers seller and broker presented to you initially on which you based valuation of the Business in the LOI.
It also means looking at the things that don’t always show up cleanly in a spreadsheet: how the business categorizes owner compensation, whether there are related party transactions buried in the books, how revenue is recognized, what the accounts receivable picture actually looks like.
None of this is about assuming the seller did anything wrong. Most of what gets found is messy bookkeeping. The goal of surfacing it is to make sure you understand what you’re buying.
Running in Parallel: Lender, Legal, and Everything Else
Before diligence can really get going, two things need to be true: the LOI is signed, and the broker or seller is ready to start providing documents. Everything else, finalizing things with the lender, finalizing the asset or stock purchase agreement, runs in parallel to the diligence process.
Here are the four parties that matter most early on after signing an LOI:
Lender: SBA and conventional lenders often have their own document requirements, which overlap with diligence docs but aren’t identical to what diligence needs. Lender timelines also frequently run longer than diligence itself, so the earlier that process is moving, the less likely it is to hold up your closing date.
Legal: The asset or stock purchase agreement will usually start getting drafted a couple of weeks into diligence, so that if there are major issues that could cause the deal not to go through, or material differences, those are known before attorneys are deep into it. You want that figured out before engaging attorneys heavily, especially since they usually work hourly. Your attorney will also need to start thinking through reps and warranties language that reflects whatever the QoE turns up.
Tax accountant: They matter especially if there are personal or related-entity tax considerations, common in SMB deals with pass-through entities like S-corps.
Insurance broker. Getting quotes early avoids a scramble right before close, especially if insurance is a big part of the business’s risk.
The lender and legal team are most important and will likely be a part of any deal. While the tax accountant and insurance broker remain important, their role and weight in the deal will come down to your personal needs and circumstances.
How Rapid Diligence Fits Into This
Once you engage us, things move quickly. If you’ve already started a data room, even an informal one, the first thing we do is go through what’s there and pull it into our own system so nothing gets requested twice. Then we introduce ourselves to the seller and broker, usually both, and make sure you’re copied on that correspondence and everything that follows.
From there, we ask for whatever’s still missing. If you haven’t collected anything yet, that’s completely fine. Bank statements, credit card statements, tax returns, P&L, all of it gets requested directly. We track all of it in a shared document so it’s visible at every point what’s been provided, what’s outstanding, and who it’s waiting on.
Common Early Missteps
A lot of buyers try to assemble everything before engaging us, on the logic that arriving fully prepared will move the process along faster.
That’s great, but it’s not really necessary, and it doesn’t always speed things up the way it seems like it should.
The initial document requests follow a fairly standard system, so that part’s predictable. But almost everything requested after that is bespoke to the deal. It depends on what shows up in the P&L, what the business looks like, what the early findings point toward.
Since we handle the collection ourselves once engaged, trying to have it all gathered in advance doesn’t save the time buyers expect it to.
The other thing worth noting that slows down the process quite a bit: insisting that every request route through you instead of giving us direct access to the seller and broker.
This does come up, roughly one deal in twenty, and there are legitimate reasons for it, like a seller who’s hard to reach or a distressed business. When that’s genuinely the case, it’s a completely valid way to run the engagement.
But by default, it adds a step to every single request. Instead of us asking the seller directly, we’re asking you, you’re asking the seller, and the answer comes back the same way, which means more work on your end and a slower process for everyone.
Quick Wins
The biggest win: give us everything you’ve got.
Notes, documents, a running list of questions you’ve already asked the seller and the answers you got back, your own thinking as you’ve looked through the data.
You don’t need to sort through it first or decide what’s relevant. That part is our job, and we have systems in place to create an organized process. During onboarding, you can hand over what you have and let us sort out where it fits.
The payoff shows up later in the process. If we ask about a specific expense and you’ve already asked the seller that exact question, having that answer on file means we’re not duplicating a request you’ve already made.
We review what’s been provided before we go back to the seller with something new, so the more context you’ve given us upfront, including your own read on things, the fewer times we end up asking something you’ve already covered.
Where This Leaves You
The week after signing an LOI can feel like the calm before a storm of documents and deadlines. In reality, it’s a short window where a handful of low effort moves, a heads-up to the seller, a few calls to the right people, pulling together what you already have, set the tone for everything that follows.
If you’re under LOI and getting ready to start diligence, we’d love to talk before the formal process even kicks off.
