When a buyer starts examining your business in detail, small things get noticed. This process is called due diligence, and in it, small evasions can grow into big problems.
Three faux pas, in particular, tend to raise buyers’ suspicions. In this post, we’ll explain what each one looks like, why it damages trust, and how it can cost you money. We’ll also show you how to avoid all three well before a buyer asks a single question.
Why Small Things Matter in Due Diligence
Due diligence is the buyer’s chance to check that your business is what you say it is. Their accountants, lawyers and advisers go through your finances, contracts, staff arrangements and systems. Typically, the process runs for several weeks.
During that time, the buyer’s team reads every response closely. They notice how quickly you answer, how complete your answers are, and how easily you find documents. Because they handle many deals, they’ve learned to spot patterns.
That’s why trust matters so much. A buyer who trusts you moves ahead with confidence. In contrast, a buyer who starts to doubt you checks everything twice, and the doubt rarely stays small.
Faux Pas 1: Burying the Buyer in Paperwork
The first faux pas is burying them in paperwork. Sellers sometimes send a mountain of irrelevant documents, hoping that a genuine gap in the detail gets lost in the noise.
Sometimes the motive is deliberate. More often, though, it comes from anxiety. The seller wants to look helpful, so they send everything, just in case. Unfortunately, the effect looks the same either way.
Why it backfires
Experienced advisers know what they’ve asked for, and they know what has arrived. When a request for one contract produces two hundred unrelated files, the team notices immediately. They also notice the specific document that is still missing.
As a result, the strategy defeats itself. Instead of hiding the gap, the clutter draws attention to it. Moreover, it slows the whole process, which frustrates the buyer and raises their costs.
What to do instead
- Answer what was asked. Send the documents the buyer requested, and nothing more.
- Organise before you send. Use clear folder names and a simple index, so the buyer can find each item quickly.
- Flag the gaps yourself. If a document doesn’t exist, say so and explain why.
- Keep a log. Record what you sent and when, so nothing goes missing.
Faux Pas 2: Giving Answers That Don’t Match the Question
The second faux pas is giving answers that don’t match the question. This takes two opposite forms, and both cause trouble.
Too much detail
Sometimes a buyer asks a specific question, and the seller replies with a long, rambling explanation. The buyer wanted a simple fact, such as the date a contract ends. Instead, they receive pages of background.
To an outsider, that looks like deflection. It seems as though the seller is hoping the main point disappears among the extra words.
Too little detail
Sometimes the opposite happens. The buyer asks for a full breakdown of revenue by customer, and the seller replies with a single line. For example, they might write “revenue is healthy” and leave it there.
This looks equally evasive. The buyer asked for detail, and a short reply suggests the seller either can’t provide it or doesn’t want to.
The real cause is often disorganisation
Here’s the important point. Both patterns read as evasion, even when they’re really just disorganisation. A busy owner may not know where the information sits. Alternatively, they may not understand what the buyer needs, or they may be rushing between tasks.
Unfortunately, the buyer can’t read your mind. They see only the answer, and they draw their own conclusions.
What to do instead
- Read each question carefully. Check what the buyer actually wants before you reply.
- Match the level of detail. Give a short answer to a short question, and a full breakdown when someone requests one.
- Ask for clarification. If a question seems unclear, say so rather than guessing.
- Use one point of contact. A single organised person who handles all queries keeps answers consistent.
Faux Pas 3: The Conveniently Unavailable Report or Person
The third faux pas is the conveniently unavailable report or person. You’ve probably heard versions of these lines:
- “Our old system can’t produce that.”
- “The only person who knows about that contract is away this month.”
- “We don’t keep records in that format.”
Sometimes these statements are completely true. Systems do have limits, and people do take holidays. Even so, buyers hear these excuses often, and they tend to appear exactly when a sensitive question arrives.
Why it raises suspicion
A single unavailable report seems harmless. However, repeated excuses create a pattern. The buyer starts to wonder whether the business can really produce reliable information, or whether certain areas are being kept out of view.
Furthermore, the excuses reveal a deeper problem. If nobody except one absent person understands a key contract, the business depends on that person. And if the system can’t produce a basic report, the buyer questions the quality of your records generally.
What to do instead
- Test your systems early. Find out which reports you can and can’t produce, long before a buyer asks.
- Share knowledge. Make sure more than one person understands every important contract and process.
- Plan for absences. Keep contact details and documents accessible while key people are away.
- Offer a workaround. If your system can’t produce a report, explain how you’ll supply the information another way.
Why These Faux Pas Look the Same to a Buyer
None of these faux pas are necessarily signs of dishonesty. Plenty of honest owners fall into all three simply because they never prepared.
Nevertheless, an experienced buyer’s team can’t tell the difference. They see paperwork that doesn’t match their requests, answers that miss the point, and reasons why information isn’t available. To them, it all looks the same: it looks like something is being hidden.
This is the heart of the problem. Your intentions don’t matter nearly as much as the impression you create. Consequently, innocent disorganisation can cost as much as deliberate concealment.
How Suspicion Costs You Money
Once a buyer starts to suspect that something is being hidden, they respond. They don’t usually announce their doubts. Instead, they adjust their position in ways that protect them. Typically, they will:
- Ask for a lower price. If the risks seem greater, the value seems lower.
- Demand tougher payment terms. For example, they might push to defer more of the price, or link it to future performance.
- Seek stronger guarantees. They may ask for wider warranties and indemnities, which leave you more exposed after the sale.
- Extend the investigation. Extra checks add time, cost and uncertainty.
- Walk away. In some cases, the doubts grow too large and the deal collapses.
None of these outcomes works in your favour. Worse, they often arrive late in the process, when you’ve already invested months and told staff, family and advisers about the sale.
Buyers Don’t Need to Catch You Lying
This point deserves emphasis. Buyers don’t need to catch you lying to hurt your position. Disorganised or evasive-looking answers cost sellers money all by themselves.
A seller who is honest but messy can lose just as much as one who hides things. The buyer simply prices in the risk of what they can’t see. And because uncertainty feels expensive, they usually assume the worst.
That’s good news in one sense, though. Because the problem often stems from disorganisation rather than dishonesty, you can solve it with preparation.
How to Get Organised Long Before a Buyer Asks
The businesses that come through due diligence unscathed are the ones that got organised long before a buyer ever asked a question. Here’s how to join them.
- Build a data room early. Gather your key documents in one organised place, covering finance, contracts, staff, property and compliance.
- Check your paperwork for gaps. Look for unsigned agreements, missing records and inconsistent figures, and fix them quietly.
- Test your reporting. Make sure you can produce the standard reports a buyer will request, in a clear format.
- Document your processes. Write down how the business runs, so knowledge doesn’t sit in one person’s head.
- Prepare for the likely questions. Think about what a stranger would ask, and write clear answers in advance.
- Appoint a coordinator. Choose one organised person to manage requests and keep answers consistent.
- Rehearse with an adviser. Ask your accountant to play the buyer, and answer their questions as you would in a real deal.
Ideally, you should start months before you plan to sell. That timing gives you room to fix problems calmly, rather than patching them under pressure.
What a Readiness Review Can Do
A pre-sale readiness review brings all of this together. An independent adviser examines your business the way a buyer’s team would. They look for the same gaps, the same inconsistencies and the same habits that raise suspicion.
Because the adviser works for you, they can tell you what they find honestly and privately. You then have time to put things right before a real buyer arrives. As a result, you enter the sales process with confidence, rather than hoping nobody asks the difficult questions.
The Bottom Line
Buyers don’t need to catch you lying. Disorganised or evasive-looking answers cost sellers money all by themselves. The businesses that come through due diligence unscathed are the ones that got organised long before a buyer ever asked a question.
How H&Hendricks Can Help
A pre-sale readiness review, designed to catch exactly this kind of issue before a real buyer does, is part of H&Hendricks’ Preparing for Sale service. If a sale is even a possibility in your future, starting early gives you the time to get everything in order.
Ashley Bancroft is a founding Partner of H&Hendricks. A qualified Chartered Accountant and specialises in finance, strategy and entrepreneurship, with particular focus on value creation.
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