Every workstream does three jobs
The roadmap runs earnings quality, working capital, customers and tech, operations, then a findings call.
Confirm, quantify, convert
Confirm the validation assumptions, quantify each flagged risk with a dollar impact, and convert findings into deal actions fast enough to adjust price, structure, or timeline.
The output
Not a giant report. A short list of term changes, or a clean walk.
Earnings quality and working capital
Recreate EBITDA
Rebuild it from 24 months of general ledger, line by line, and investigate any variance over 5 percent. Validate every add-back; undocumented ones get the 50 percent rule (claim 100, credit 50). Add back the costs that hit you post-close: market-rate owner replacement, hidden benefits, deferred maintenance.
Decide by delta
Versus your validation number: under 10 percent, proceed at LOI price; 10 to 20 percent, renegotiate; over 20 percent, walk or major reprice.
Working capital warnings
A declining trend (down over 20 percent in six months with no reason), AR aging deterioration (30 percent over 60 days past due), and stretched payables (paying Net 60 on Net 30 terms) all signal tight cash and post-close trouble.
Customers, tech, and team
Call the top 10 customers
The seller introduces, then leaves the call. Five questions on tenure, what would make them leave, awareness of the sale, annual spend, and recent concerns. Score retention 1 to 5; any top-3 at 2 or below makes structural protection mandatory.
Audit the tech stack
The workstream most buyers skip until it is too late. System inventory and ownership, domain and email control, data access and export, and security and continuity. If the average score is below 3 or any score is 1, budget a 30 to 60 day migration.
Map the team
A responsibility matrix of 10 to 12 critical functions: who does each today and who could if that person left tomorrow. Key-person risk is where the owner does it with no backup.
Convert findings to deal actions
By week four, every finding lands in one of four buckets.
Walk-away
Fraud, an undisclosed lawsuit over the purchase price, a top customer already gone, non-transferable systems.
Reprice
EBITDA 20 percent below claim, hidden debt, a major customer at high risk.
Structure or protect
Manageable concentration, transferable owner dependency, a fixable regulatory gap.
Present as facts
Group into three to five themes with dollar impact, and offer structure options, not ultimatums. Roll the scores into one diligence health score: any single score below 2 is an automatic red flag.
Due Diligence Checklist
The staged diligence request list that connects findings directly to deal terms.
Surface early, decide by week four
Well-run diligence is not only defensive. It surfaces the renegotiation leverage that careless buyers leave on the table. Every finding is a deal-stopper, a renegotiation basis, or a needed protection.
This course is operational guidance, not investment, legal, tax, or financial advice. SilverShore Partners is not a registered broker-dealer or investment adviser; in qualifying private-company transactions we may operate within the federal M&A broker exemption under Section 15(b)(13) of the Securities Exchange Act. Confirm specifics with your own advisors.