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Due Diligence Checklist

Comprehensive Review Guide for SMB Acquisitions

📊 Financial

Historical Financials

• 3-5 years of tax returns
• 3-5 years of P&L statements
• Balance sheets (current and historical)
• Cash flow statements
• Monthly financials for last 24 months
• Revenue by customer (concentration analysis)
• Revenue by service type (project vs service mix)
• Gross margin by job type
• AR aging report
• AP aging report

Quality of Earnings

• Addbacks and adjustments explained
• Owner compensation vs market GM salary
• One-time revenues or expenses identified
• Seasonality patterns understood
• Working capital requirements

⚙️ Operations

Customer Base

• Top 20 customers with revenue %
• Customer concentration (no single >10%)
• Length of customer relationships
• Contract terms and renewal rates
• Maintenance agreement details
• Customer loss analysis (last 3 years)

Service Mix

• Breakdown: residential vs commercial vs industrial
• Breakdown: service/repair vs new install vs project
• Recurring revenue as % of total
• Average ticket size by service type

Technology

• Current software stack (CRM, FSM, accounting)
• Data quality and history
• Integration capabilities
• AI readiness assessment

👥 People

Owner Dependency

• Owner's role in daily operations
• Owner's customer relationships (key accounts)
• Transition plan and timeline
• Non-compete terms

Staff

• Org chart
• Employee roster with tenure
• Compensation details (all employees)
• Licenses and certifications
• Key person risk assessment
• Turnover rate (last 3 years)

⚖️ Legal & Compliance

Contracts

• Material customer contracts
• Supplier/vendor agreements
• Lease agreements (facilities, equipment)
• Vehicle leases
• Insurance policies

Licenses & Permits

• Business licenses
• Trade licenses (electrical, HVAC, etc.)
• Municipal permits

Compliance

• WSIB status and history
• CRA compliance (HST, payroll)
• Safety compliance
• Pending or threatened litigation

🏢 Assets

• Asset list with age and condition
• Maintenance records
• Replacement schedule / capex needs
• Owned vs leased facilities
• Lease terms and renewal options
• Parts and materials inventory

🤖 AI & Value Creation

• Current tech stack assessment
• Quick wins identified (call handling, dispatch)
• Implementation timeline
• New service line opportunities
• Geographic expansion potential
• Process standardization needs