Due Diligence from the Seller's Side: What to Expect in Practice During the Buyer's Audit

You have signed a letter of intent (LOI) with a serious buyer. A major milestone has just been passed: the preliminary negotiation is behind you. But before the sale agreement is signed and closing takes place, you will have to go through an unavoidable phase — often little known to sellers — called due diligence. Here is what to expect in practice, how to prepare for it, and why good organisation upstream can make all the difference.

1. What is due diligence and when does it take place?

Due diligence — sometimes described as an “acquisition audit” or “pre-acquisition review” — is the process by which a buyer verifies, in depth, the information you have provided throughout the preliminary discussions. It takes place after the LOI is signed and before closing: it is the validation phase.

In practice, the LOI marks the end of the mutual courtship phase. The buyer has decided to go further; they now need to make sure that reality matches the figures and representations you have made. This is not a sign of distrust: it is a structured, normal and necessary step in any serious SME sale.

Due diligence directly determines the final terms of the sale agreement, and in particular the warranties and indemnities you will be asked to give. It may also lead to an adjustment of the price or payment terms if unexpected elements come to light.

2. The main categories of audit

Serious due diligence covers several dimensions of your business. Here are the main ones:

• Financial due diligence: analysis of the accounts, real profitability, cash flows, debts and off-balance-sheet commitments.
• Legal due diligence: review of contracts, articles of association, powers of attorney, current or past disputes, shareholding structure.
• Tax due diligence: verification of tax compliance, past returns, potential reassessment risks.
• Employment and HR due diligence: employment contracts, applicable collective labour agreements, dismissal situations, social security contributions, occupational pensions (LPP).
• Operational due diligence: analysis of internal processes, key dependencies (customers, suppliers, employees), IT tools, intellectual property.
• Environmental due diligence: relevant depending on your sector (industry, chemicals, construction), notably for soil contamination or regulatory compliance risks.

Each buyer adapts the scope of the audit according to the sector, the size of the business and the perceived risks. Some categories will be examined more closely than others depending on your profile.

3. What the buyer will actually ask you for

The list of documents requested may seem daunting at first glance. Here are the items most frequently requested in the due diligence of an SME in French-speaking Switzerland:

• Annual accounts and balance sheets for the last 3 to 5 financial years (income statements, balance sheets, notes)
• Tax returns and correspondence with the cantonal tax authority
• Significant customer contracts (current and recently expired)
• Contracts with strategic suppliers and service providers
• Employment contracts for all staff, up-to-date organisation chart
• Commercial leases (term, rent, renewal options)
• Insurance policies in force (liability, business interruption, etc.)
• Registered trademarks, patents, licences and intellectual property rights
• Current or past disputes (with customers, suppliers, employees, authorities)
• Articles of association, share register, minutes of general meetings
• Bank loans, leases and guarantees granted

To find out more about preparing your documents, see our dedicated article: Which documents to prepare to sell your SME in French-speaking Switzerland.

4. The data room: organisation and secure access

The data room is the space — nowadays almost always virtual — in which you make the requested documents available. Access is controlled, tracked and progressive: you do not share everything at once, but by category, as the audit moves forward.

A well-structured data room generally contains thematic folders: Finance, Legal, HR, Operations, Tax, Intellectual Property, etc. Each document is clearly named, dated, and accompanied by context where necessary.

Why plan this organisation in advance? Because a seller who arrives with a ready-made data room saves weeks, avoids repeated reminders, and sends the buyer the positive signal of a well-run business. Conversely, missing or poorly organised documents generate distrust and lengthen timelines — sometimes to the point of jeopardising the transaction.

5. The real pace and duration of due diligence

In the context of a French-speaking Swiss SME, due diligence generally lasts 4 to 8 weeks from the time the first documents are made available. This period varies according to the size of the business, the complexity of its structure, and how well prepared the seller is.

The process does not happen in a single wave: expect back-and-forth exchanges in the form of written questions, requests for clarification or additional documents. Some questions will seem trivial to you; others will touch on sensitive aspects of your business.

It is important that you plan, during this period, for a real commitment of your time as well as that of your accounting and legal partners. Due diligence is not something you handle alone. Your fiduciary, your business lawyer and you yourself will need to respond accurately and within reasonable timeframes.

6. The most frequent points of friction

Even in the best-prepared files, certain points of tension come up regularly:

• Normalised EBITDA adjustments: the buyer seeks to identify non-recurring costs, the owner's benefits in kind, rents under- or over-stated between related parties. Disagreements over these adjustments can lead to a price revision.
• Cash or working capital gaps: if the cash position at closing differs from what was anticipated, adjustment mechanisms are generally provided for in the agreement.
• Undisclosed or underestimated disputes: an employment dispute, a tax procedure or a contractual disagreement discovered during the audit can seriously complicate negotiations.
• Contracts without an assignment clause: some customer or supplier contracts contain change-of-control clauses that require renegotiation or prior authorisation.
• Excessive dependence on the owner: if the buyer finds that most of the value rests on you alone (network, undocumented know-how), the structuring of the deal may be affected.

These elements will have a direct impact on the warranties and indemnities you will be asked to give when the sale agreement is signed. To better understand this mechanism, we invite you to read: Warranties and indemnities in the sale of your SME: scope, duration and points of vigilance.

7. How to prepare properly in advance

The best due diligence is the one you have anticipated. Here are the concrete actions to put in place 2 to 3 months before entering into contact with a buyer:

• Put together a complete, up-to-date file: certified accounts, renewed contracts, updated staff register. A clean file reflects the quality of your management.
• Identify your company's sensitive areas and prepare clear explanations. An anomaly explained is better than an anomaly discovered.
• Appoint a single point of contact on the seller's side — ideally yourself or your chief financial officer — to centralise all communications with the buyer.
• Choose transparency over omission: what you have not disclosed will be discovered, and on worse terms. Trust is an asset in a transaction.
• Talk to your fiduciary and your lawyer in advance: they can help you prepare a data room and identify the points that will deserve a proactive explanation.

To understand what a buyer will look at first in your business, we also recommend reading: What a buyer really looks for in an SME in French-speaking Switzerland.

8. The advantage of a process led by a direct buyer

At Vendre-Entreprise.ch, we are a direct buyer of SMEs. This fundamentally changes the nature of due diligence for you as a seller.

You are not dealing with an intermediary who passes your information on to unknown third parties. You deal directly with the final acquirer, which guarantees:

• A single point of contact throughout the process, from first contact through to closing.
• Complete confidentiality: your business is not put on the market, your name does not circulate among multiple buyers.
• Structured speed: our commitment is to send you an LOI within 72 hours of our in-depth discussion, and to conduct due diligence within a clear, well-defined framework.
• Structured support at every stage — including during the audit — so that you know exactly where you stand and what lies ahead.

Due diligence is not an obstacle: it is a stage in building mutual trust. The better prepared you are, the more smoothly it will run — and the sooner you can move on to closing.

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Disclaimer: This article is published for information and educational purposes only. It does not constitute legal, tax or financial advice and cannot replace the personalised support of a lawyer, fiduciary or tax adviser. Every sale situation is unique; we recommend that you consult qualified professionals before taking any decision relating to the transfer of your business.