Below the threshold where private equity brings its own diligence teams, most acquirers are underwriting on the seller's representations and a financial review that looks backward three years.
An acquisition financed through SBA 7(a) amortizes over ten years, and the buyer signs personally. A financial quality of earnings review examines three years backward. Legal diligence examines the entity as it stands today. Neither workstream looks in the direction the debt runs.
The engagements below close that gap. They are sized for transactions between roughly $500,000 and $10 million in enterprise value, and scoped to complete inside a standard exclusivity period.
Acquisition Risk Assessment. The full assessment. Systems, people, process, customer and supplier concentration, owner dependence, and what transfers at close. Evidence is collected from four independent sources and the disagreements between them are the findings. Suitable when the target is under LOI and the decision is whether to proceed, at what price, and with what conditions.
Technology Quality of Earnings. A narrower instrument answering one question: does this revenue survive the note. Four dimensions — task substitutability, the physical and regulatory floor, intermediation exposure, and second-order exposure through the customer base. Delivered inside a full assessment or sold standalone when durability is the specific concern.
Franchise Unit Assessment. Evaluation of a franchise resale — the transfer provisions, remaining term and its valuation impact, system health, the true fee load, and whether the unit's economics can be represented at all under the disclosure rules. A franchise resale is not a business sale with additional paperwork; there is a third party at the table whose consent is mandatory.
External Read. Two to three days, no seller cooperation required. Externally observable operating posture, public record, and a preliminary durability read. Appropriate pre-LOI, or while deciding which of several targets deserves a full engagement.
Thirteen assessments are published in full: the domain risk register, the scoring behind it, the diligence inquiries it generates, and the post-close integration cost attached to each finding.
Two proceed. Ten proceed with structure. One does not.
Diligence divides along two axes. One is the domain under examination — financial on one side, operational and technological on the other. The other is which side of the table you sit on.
Financial diligence is well served. Quality of earnings providers are numerous, the methods are standardized, and any competent CPA can substantiate add-backs. The operational and technological column is where lower middle market transactions are consistently underwritten on assumption rather than evidence, on both sides.
This practice occupies that column. On the buy side, that means establishing what the business actually runs on and whether it holds. On the sell side, the same investigation performed early enough to act on.
Financial quality of earnings is not performed here. Earnings verification, add-back substantiation, and working capital analysis are a CPA's work, and where that is needed and not already underway, an introduction is available.
Four independent sources: documents, structured interviews, direct observation of the systems in use, and external measurement requiring no cooperation from anyone.
Collected separately, they rarely agree in full. A capability confirmed in conversation but absent from the contracts and invisible from outside is not a missing feature. It is a revenue projection resting on something that does not exist.
Requests go in during the first week of exclusivity. The seller is slow, the clock is short, and this is the third workstream in the queue behind financial and legal.
Where exclusivity is unusually tight, scope compresses to risk assessment with remediation pricing deferred. Where no LOI exists yet, the external read is the appropriate first step.
Schedule a discovery call to scope an engagement, or to get a read on whether a target is worth a full assessment.