Due diligence is where you find out whether what you were shown is what exists. Everything up to now has been the seller’s version. This is the part where it gets checked, and it is the last point at which walking away is free.

It is also where the price gets decided in practice. Most small acquisitions do not fall apart at diligence, they get repriced, because diligence surfaces things that are real and manageable and worth money. Going in expecting to renegotiate rather than to be reassured is the right posture.

Have a letter of intent with a diligence period and an exclusivity window, so you are not spending fees while the seller keeps showing it to other people.

Budget for professionals and use them. An accountant on the numbers and an attorney on the contracts and the liabilities. What diligence costs varies with the size and complexity of the business, and a quality of earnings review is a meaningful expense on a small acquisition. Agree scope and fees in writing before starting. Not yet confirmed by LAEDC. This is cheap against buying a problem.