The heads of agreement are signed, the celebratory dinner has happened, and on Monday morning the first information request lands. It is a list of around two hundred questions. The response window is short. Many of the questions you can answer in your sleep; some require pulling reports you have not generated in six years; a few touch on things that live entirely in your head. By Tuesday, the second batch arrives, clarifying questions on Monday’s answers, and you realise, with some quiet panic, that you have not yet looked at any actual business issues today.
This goes on for three to four months. Practitioners working in this space describe it consistently: the standard due diligence period runs ninety to one hundred and twenty days, and during that period the seller is, in practical terms, doing two jobs. Running the business is one. Producing the data, taking the calls, sitting in the workshops, signing off on the legal drafts is the other. The label most often attached to the experience is “a second full-time job”, and it is not used loosely.
This is the part of selling that most owners walk into with the least preparation, and it tends to be the part that costs the most.
The Hidden Cost That Doesn’t Show Up on the Term Sheet
The obvious cost of due diligence is time. The cost most sellers miss is what that time is taken from. While due diligence is running, the business itself still needs to be run, customers serviced, staff led, suppliers paid, the next quarter’s pipeline built. Every hour you spend digging through old contracts to satisfy a buyer’s information request is an hour you are not spending on the operating job that built the business in the first place.
This is not academic. Practitioners are direct about the consequence: when the seller’s attention drops away from the operations during a long diligence process, sales or profitability can soften and a soft quarter, mid-process, can prompt a buyer to revisit the price or the terms. The deal you negotiated in March is not always the deal you complete in July, and the gap between them is sometimes the result of you having spent the intervening months answering questionnaires instead of running the company.
This effect has nothing to do with bad-faith buyers. It is a structural feature of any process where the seller is asked to do, simultaneously, two jobs that each require their full attention. The longer the process runs, the more the risk compounds.
Why It’s Getting Heavier in the Current Market
Recent commentary on the Australian M&A market makes it clear that diligence is, on average, taking longer and going deeper than it did a few years ago. Buyers are choosier than they were. Deals come with more involved structures. Regulators are paying closer attention. The scope of what is now examined has widened to include closer scrutiny of recurring versus one-off earnings, working capital cycles, customer and supplier concentration, the depth of the management team, and the seller’s own succession planning.
Australian dealmaking analysis from one of the major accounting firms describes the trend plainly: with buyers becoming more cautious, diligence is consuming more of each transaction’s calendar, and the work itself is going deeper. Separate research from a US-based mid-market specialist published earlier this year flags a related shift, more days on the clock, more third-party providers involved in the process, more outside firms the seller has never met asking questions about the business.
For the seller, the practical effect is the same regardless of cause: more questions, more meetings, more documents requested, more days during which the business has to keep performing while you are answering them. None of this is a reason not to sell. It is a reason to know what you are walking into.
How Diligence Is Run Tells You What Comes Next
There is one more thing worth saying about due diligence, and it has nothing to do with the workload. The way a buyer runs diligence is, almost always, a preview of how they will run the relationship afterwards.
A process where every information request comes from someone you have not spoken to before, where the people doing the work are external advisors with no prior relationship to the conversation, where the questions feel as though they are being asked to find a problem rather than confirm an understanding. That process is telling you something. Not necessarily that the buyer is acting in bad faith. Often the opposite: it is telling you that the buyer’s model is built on outsourcing diligence to specialists who, after settlement, will hand the relationship over to a different group of people who run the business. The shape of the courtship is the shape of the partnership.
A process that builds on conversations you have already had, where the people asking the questions are the people you will continue to work with, where the requests are scoped to verify rather than excavate, is telling you something different. There is more continuity in the relationship; the people on the other side of the table now are likely to be the people on the other side of the table later.
Two questions are worth asking, early in any process, before too much time has been committed. Who, specifically, will I be talking to during diligence? And how much of the work will be done by people I have already met? The answers tell you a great deal about what the next ninety days will feel like and, if the deal completes, a great deal about what the next ten years might look like.
The cost of diligence is real. The signal it sends is also real. Worth tracking both.
Common Questions
Q. How long does due diligence take when selling a business in Australia?
A standard due diligence period runs 90 to 120 days, though some buyers may push for 60. Recent commentary on the Australian M&A market notes that diligence is generally taking longer than it did a few years ago, as buyers become more selective and the scope of investigation widens.
Q. What is involved in due diligence for a business sale?
Modern due diligence typically covers: detailed financial review (quality and sustainability of earnings, working capital cycles); commercial review (customer and supplier concentration, contract terms); operational review (management depth, dependencies, processes); and legal review (contracts, compliance, litigation history). Increasingly, buyers also examine the seller’s own succession plan.
Q. How can I make due diligence on my business easier?
Pre-sale “business hygiene” — sometimes called a sale-readiness checklist, is the single biggest determinant of how smoothly diligence runs: clean, separated financials; documented operational processes; signed customer and supplier contracts with change-of-control clauses understood; formalised leases; and current statutory employment obligations. Most of this work is also good general management and is worth doing regardless of timing.
Q. What is the difference between in-house and external due diligence?
In-house diligence is run primarily by the buyer’s own team, building on prior conversations with the seller. External diligence outsources most of the work to third-party advisors (legal, accounting, commercial specialists) the seller has not previously dealt with. The shape of the diligence process is, in practice, often a strong indicator of how the buyer will manage the relationship after settlement.
