“TRUST STARTS & ENDS WITH THE TRUTH”
“TRUST STARTS & ENDS WITH THE TRUTH”
Matt is both the company founder and a nationally renowned private investigator. Matt is an intelligence specialist who excels in detecting and preventing the illegal interception of communications and in providing high-tech covert surveillance. Matt has years of hands on experience in the investigation industry and has developed a reputation for incorporating state of the art technology and innovative ideas to provide effective solutions for his clients. Matt also serves as Treasurer for the Executive Board of Directors of FALI, The Florida Association of Licensed Investigators.
A financial due diligence checklist lists the records a buyer reviews in a business purchase: earnings, cash flow, debt, taxes, and working capital. Our investigators get called when those records looked fine and the deal still went wrong. We cover the full document checklist below, along with the step that list leaves out, which is confirming who is on the other side.
A financial due diligence checklist covers the records that show how a business earns, spends, borrows, and pays tax. Buyers use one when purchasing a company. Investors, lenders, and new partners use the same list on a smaller scale, including someone about to lend a large sum to a friend’s business.
The checklist tells you which documents to ask for and what each one should prove. A standard request reaches back three to five years for financial statements and tax returns, with monthly detail where the business has it.
Financial due diligence and an audit are separate exercises. An audit gives an opinion on past financial statements as a whole. Financial due diligence is scoped to one deal and the buyer’s questions, and the ICAEW, the UK’s chartered accountancy body, states that the work is not an audit or assurance opinion.
The table below sets common assumptions against what holds true in practice.
| What people assume | What is true |
|---|---|
| Financial due diligence is an audit | The scope is agreed for one deal, and the report carries no assurance opinion |
| Audited statements make a deal safe | An audit covers past statements and leaves future earnings untested |
| A finished checklist means finished diligence | The checklist tests documents the seller chose to hand over |
| Public record searches are a formality | Court, lien, and ownership filings are where undisclosed history shows up |
| Only large deals need diligence | The same questions apply to a small purchase, a partnership, or a private loan |
The documents to request fall into eight groups, and each group answers one question about the business. Adjust the list to the size of the deal with your CPA, since a two-person service company and a manufacturer with inventory carry different risks.
Financial statements
Tax records
Revenue and customers
Quality of earnings
Working capital
Debt and liabilities
Forecasts
Financial controls
Core financial documents for due diligence are income statements, balance sheets, cash flow statements, and tax returns for the years under review, plus current management accounts. Buyers also request receivables and payables aging, a debt schedule, payroll records, major customer contracts, and bank statements. Your CPA will add or remove items based on the business and the deal structure.
Financial due diligence red flags are patterns in the records that call for a second look, and the most common ones involve profit that fails to show up as cash.
Red flags:
A red flag is a question, and many have ordinary answers. A seasonal business will bunch invoices, and a founder-led company will often lean on one customer. The test is whether the seller can explain the pattern with documents.
The seller’s history matters as much as the pattern. The Association of Certified Fraud Examiners studied 2,402 occupational fraud cases for its 2026 Report to the Nations, and cases where the fraudster had past legal problems were associated with a median loss of $400,000. Court history is one of the first things our investigators pull for that reason.
When the numbers point to theft or embezzlement inside the company, the question shifts from accounting to evidence, which is the territory of corporate fraud and theft investigations.
A financial checklist does not verify the people who prepared the documents, and a longer list of seller-supplied records cannot close that gap.
Reviewing only what the seller hands over is like buying a used car on the strength of the seller’s own service receipts. The receipts may be accurate. You would still run the title and the accident history.
A due diligence investigation looks at the person and the company through records the seller does not control:
Two of those checks are open to anyone. Florida’s Division of Corporations lets you search company filings by officer or registered agent, which shows other entities tied to the same name. Federal bankruptcy and civil cases can be searched by party name through PACER, the federal courts’ records system, once you register for an account.
Public searches have limits. County court records, out-of-state filings, and companies held through relatives take more work to connect, and that is the point where clients bring us in.
Example (illustrative, not a client case): A buyer in Orlando agrees to purchase a pool service company. The statements tie to the tax returns, and the CPA signs off on the numbers. A state filing search then shows the seller is absent from the company’s officer list, and the only officer named is a relative who never joined the talks. A federal court search shows that relative filed for bankruptcy two years earlier. The buyer pauses the deal and has the attorney confirm who holds the authority to sell.
Know who is on the other side of your deal.
We search court, corporate, and licensing records on the seller and the company, then report the findings in writing.
See what a due diligence investigation covers
Confidential, and handled by a licensed Florida investigator.
A due diligence checklist for buying a small business uses the same eight groups, cut down to what a small company keeps. Expect tax returns, bank statements, a profit and loss report, and an equipment list in place of audited statements and formal forecasts.
Thin records raise the value of outside checks. When a business runs on an owner’s spreadsheet, bank statements and tax returns carry more weight, and so does the owner’s own track record.
Readers in the United States who are looking at a packaged business opportunity have one added protection. Under the FTC’s Business Opportunity Rule, a covered seller must give you a one-page disclosure document at least seven days ahead of any signature or payment, and that document has to list certain lawsuits involving the seller. The rule applies to business opportunities as the FTC defines them, so many ordinary sales of an existing company fall outside it.
Rules for buying a business differ by state, and everything here is general information. A CPA should review the numbers, and an attorney should review the contract and tell you which rules apply to your purchase.
Financial due diligence is conducted by accountants, usually a CPA firm or a transaction advisory team working for the buyer. Attorneys handle the legal review and the purchase contract. Licensed investigators check the backgrounds, court records, and business histories of the people involved. On a small deal, the buyer’s own CPA and attorney often cover the first two roles.
Financial due diligence takes four to six weeks for a typical middle-market deal, according to DealRoom, an M&A software company, and the clock depends on how quickly the seller produces records.
The process follows a set order:
Start the background checks early. Court and corporate records take time to pull across counties and states, and a finding in week one changes the questions you ask in week three.
A middle-market financial due diligence review takes four to six weeks, based on DealRoom’s published timeline. The pace depends on how fast the seller delivers records and how many entities are involved. A small single-company purchase with organized books can finish sooner, while cross-border deals and carve-outs take longer. Ask your CPA for a schedule at the start.
A financial due diligence report summarizes the accountants’ findings on adjusted earnings, working capital, debt and debt-like items, and the risks that affect price or deal terms. A background investigation produces a separate written report covering court records, corporate filings, licenses, and business history. Buyers and their attorneys read both together when setting final terms.
Bring in an investigator when the deal depends on trusting a person you have known for a short time, or when something in the records does not add up. Common triggers include a seller who is new to you, a partner contributing reputation in place of capital, an out-of-state company, or a story that changes between meetings.
Southern Recon Agency is a Florida-licensed private investigation agency (License A1400197), and our investigators verify people, records, and claims. A CPA handles the accounting analysis, and an attorney handles the contract. When a dispute turns on emails or files, our Certified Digital Forensics Examiners handle recovering and analyzing digital evidence from computers and accounts the client owns.
A financial due diligence checklist covers eight groups of records: financial statements, tax records, revenue, quality of earnings, working capital, debt, forecasts, and controls. The work is separate from an audit and runs about four to six weeks on a middle-market deal. The checklist tests the seller’s documents. Court, corporate, and licensing records test the seller, and those checks belong at the start of the process.
A deal is easier to leave than to unwind.
Southern Recon Agency checks the court, corporate, and licensing history of the people and companies in your deal and documents the findings for you and your attorney.
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Florida licensed agency A1400197. Call (844) 307-7771.
Buy-side due diligence is ordered by the buyer to test the seller’s numbers and find risks that affect price. Sell-side due diligence is ordered by the seller ahead of a sale, so problems surface early and buyers start from cleaner records. Both use the same document groups, and the difference lies in who pays and who reads the report.
Standard financial due diligence focuses on the company’s records. Court cases, bankruptcies, liens, and earlier failed businesses tied to the owner sit outside the accounting scope unless you ask for them. A separate due diligence investigation covers those records and is ordered by the buyer, the investor, or their attorney.
You can gather the documents and run basic public searches yourself, including Florida corporate filings and federal court records. Analyzing earnings quality, working capital, and tax exposure calls for a CPA, and the purchase contract calls for an attorney. Treat your own review as preparation that makes the professionals’ time more productive.
A finding gives you choices while the terms can still change. Buyers commonly ask for a lower price, a different payment structure, a fix by the seller, or contract protections drafted by their attorney. Some findings end the deal. Many are manageable once the price and the paperwork reflect the risk.
A private investigator works alongside the accountants and does a different job. Investigators verify the people and the claims behind the records through court filings, corporate records, licensing boards, and interviews. Private investigation is licensed by state, so confirm the agency’s license, and leave the financial analysis to a CPA.
Matt Aubin is the Founder and Managing Partner of Southern Recon Agency, a Florida-licensed private investigation agency (License A1400197) based in Orlando. He is a Certified Digital Forensics Examiner, Certified TSCM Technician, and Florida Board Certified Investigator, and a court-qualified expert witness in cyber intelligence and cyber forensics.
Everything in this article is general information and is not legal, tax, or financial advice. For guidance on a specific deal, consult a licensed attorney and a CPA in your state.