What diligence is
Due diligence is the buyer verifying, line by line, that the business they agreed to buy is the business you described. Financial diligence reads the books against the bank statements and tax returns. Legal diligence reads the contracts, the licenses, the leases, and anything with your signature on it. Operational diligence looks at how the work actually gets done and by whom. In a licensed trade, expect particular attention on whether the licenses, and the people holding them, survive the change of ownership.
In theory it is verification, not renegotiation. In practice it is where deals reprice, and the difference between the two outcomes is almost entirely decided by preparation you either did or did not do months earlier.
Why deals reprice here
A buyer who finds a problem you did not mention has two things: the problem, and the new question of what else you did not mention. That second thing is what retrades are made of. The defense was covered in part three of this series and it has no substitute: disclose everything discoverable yourself, early, when it can be priced calmly and framed with a plan, rather than found late, when it is leverage.
The seller’s role during diligence
Run the business. Diligence takes weeks, the requests arrive in waves, and the temptation is to spend every evening populating the data room while the business drifts. But the buyer is watching this quarter’s numbers while they verify last year’s, and revenue that slips during diligence is the one discovery you cannot dispute. Having someone else manage the document flow is much of the practical point of being represented.
The mechanics of closing
The purchase agreement is the real contract, the one where the LOI’s outline becomes enforceable detail. You will make written statements of fact about the business, the reps and warranties, and stand behind them after closing. Then a closing statement accounts for every dollar: price, escrow, working capital adjustment, debt paid off at the table, fees. Read it against the LOI you signed. Then the wire lands, and the business changes hands at a minute agreed in advance.
Telling your team
The general rule: employees hear about the sale from you, after certainty, with the buyer’s plan for them ready to state. Usually that means at or just before closing. The exception is the handful of key people whose staying matters enough to negotiate retention with them earlier, under confidentiality. What you owe everyone else is not earlier information. It is a settled answer to the question they will actually ask, which is what happens to them.
Where this fits: the last step of the process, and the end of this series. The whole sequence, from first conversation to wire, is laid out on the selling page, and the written assessment is where it starts.