M&A due diligence generally includes reviews of sales, customers, and revenue by customer, product line, and geography. Our framework breaks the sales diligence process into five critical pillars. Your ability to answer the following questions with irrefutable data is the key to demonstrating a low-risk, high-value asset.

 

Pillar 1: Revenue Predictability & Forecasting

 

This pillar proves that your future revenue is not a forecast, but a mathematical certainty. Buyers focus heavily on the predictability of ARR (Annual Recurring Revenue) and subscription revenues, as this translates directly to higher exit valuations.

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1. Churn and Retention: Can you provide churn analysis and customer retention metrics over the last three years, segmented by customer size and product line?

2. Forecast Accuracy: What has been your average forecasting accuracy over the last 12 months, and is this data verifiable by a third party or audited accounts?

3. Pipeline Integrity: Does your sales pipeline accurately reflect buyer-verified milestones, or is it inflated with opportunities that lack definitive commitments?

4. Revenue Recognition: Is your revenue recognition support clear and fully compliant with local UK standards for the three-to-five-year look-back period?

 

Pillar 2: Process Systemisation & Audit Readiness

 

The buyer wants to acquire a process, not just a team. This section of the Sales Due Diligence Checklist ensures your sales motion is documented, measurable, and repeatable.

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1. Defined Stages: Are your sales pipeline stages (e.g., Discovery, Solution Design, Negotiation) clearly documented with mandatory exit criteria for each?

2. Playbook Documentation: Do you have a documented Playbook for Discovery, Value Proposition, and Objection Handling that is actively used and coached across the team?

3. Sales-Marketing Alignment: Are there clear SLAs (Service Level Agreements) between Sales and Marketing to guarantee lead quality and Predictable Revenue flow?

4. Pricing Model Integrity: Is the pricing and discounting model standardised and enforced, or does it vary widely based on individual salesperson negotiation?

 

Pillar 3: Customer Base & Concentration Risk

 

Concentration risk is a major red flag that can significantly lower the valuation multiple. Buyers will closely examine customer retention and product concentration.

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1. Customer Concentration: What percentage of your Total Revenue is represented by your top 5 customers, and are there any change-of-control clauses in their contracts?

2. Customer Switching Costs: Are customer contracts structured with switching costs (technical or contractual) that mitigate the risk of post-acquisition attrition?

3. Channel Agreements: Are all channel partnerships, distributor agreements, and referral arrangements documented, current, and transferable?

4. Customer Satisfaction: Can you provide verifiable customer satisfaction metrics and churn rates that prove customer success is embedded in the operational model?

 

Pillar 4: People & Leadership Structure

 

The buyer needs assurance that the revenue engine won't seize up when the Founder exits. This addresses retention and the depth of Fractional Sales Leadership expertise.

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1. Compensation Alignment: Is your sales compensation plan aligned with retention goals (e.g., based on renewal value, not just first-year bookings)?

2. Key Personnel Dependency: Is the pipeline success dependent on a few key individuals, or are the top performers coaching and using a scalable system?

3. Contract Integrity: Are all employee and contractor agreements current, documented, and compliant with UK employment law?

4. Succession Plan: Is there a clear, documented plan for transitioning management and Fractional Sales Leadership responsibilities post-acquisition?

 

Pillar 5: Technology & Data Integrity (CRM Audit)

 

Your CRM is the data room for sales due diligence. Inaccurate or incomplete data can be a deal breaker, justifying a price reduction.

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1. CRM Data Verification: Can you prove that your Sales Pipeline and forecasts are backed by auditable data points within the CRM (e.g., clear contact logging, updated deal values)?

2. Tech Stack Documentation: Is your entire sales tech stack (CRM, enablement tools, marketing automation) documented, including vendor agreements, financial cost, and licenses?

3. Data Governance: Are data protection and privacy compliance protocols (like UK GDPR) formally documented and auditable?

4. Data Quality: What is the measured quality of your data—e.g., the percentage of contacts with valid phone numbers, or the accuracy of your Ideal Customer Profile (ICP) data?