Marvin Russell, Founder of MySiteAuditor and current Portfolio Director at SureSwift, was driving to Nashville with his wife when he got a call from SureSwift Capital. He eagerly pulled over so his wife could drive, grabbed his laptop, and fielded a call from SureSwift. 

Russell was working with a broker for weeks and almost gave up until he spoke to McArdle, who laid out his future vision for MySiteAuditor, which perfectly aligned with Russell’s. Within an hour, he signed an LOI (letter of intent). This story could be yours, too, if you prepare for the buyer’s due diligence. 

We won’t lie to you, though, the SaaS due diligence process can be extremely strenuous and time-consuming, but preparing everything in advance allows you to jump at an opportunity when it presents itself. 

So, to give you an idea of what to prepare, we’ll review: 

  • What happens during the initial review process and how to tackle it
  • What the preliminary due diligence process looks like 
  • What happens after signing an LOI

Knowing this information makes for a smooth selling process

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What the initial review process looks like

Due diligence is for the buyer and the seller. It’s for the buyer to gauge a potential acquisition’s value and also for the seller to gauge the potential buyer’s experience buying SaaS companies and whether or not they’re a good fit for them. 

When Laura Roeder, Founder of MeetEdgar, was honing in on a buyer, she did her sell-side due diligence to find the right buyer – which just happened to be SureSwift. She says,

“While others would wait a week between calls, Sureswift was always great about keeping the process moving and scheduling the next point of contact. When I spoke to them, they had already acquired 40 SaaS companies which meant they had the process down cold (which made things a lot easier for me).” 

When Roeder was looking to sell MeetEdgar, she Googled MicroPE firms and emailed us something simple: 

saas due diligence

We replied with interest, and she sent over topline numbers like customers and ARR (annual recurring revenue). From there, we set up an initial phone call. 

When you respond yes to an investment or selling opportunity, or when an investment firm responds yes to your request, you or the firm will set up a discovery meeting, typically 30-60 minutes. Usually, it’s the senior associate and the associate or junior analyst calling to get more information about you, your company’s history, general size, Founder story, and possibly general valuation expectations. (At SureSwift, our VP of Acquisitions or even founder and CEO is in these meetings even though we have a full acquisitions team.)

During this meeting, you have time to ask them any questions you want. Take advantage of this opportunity because it’s your chance to gauge their experience and interest in your company’s future. 

Jay Kapoor, an early-stage investor and host of The Game Plan podcast, recommends only using behavioral questions during this call because, unlike situational questions, which typically elicit hypothetical, potential, and what-if answers, behavioral questions focus on past, real-life situations. 

You should ask the potential buyer questions that go in-depth about their experience with acquiring companies like yours, such as:

  • What are their buying criteria, and why does this particular business fit their model?
  • How familiar are they with your market niche?
  • Have they already invested in your niche, and what was the outcome?
  • How do they create value?
    • How do they partner with their portfolio companies?
    • Is your company a standalone purchase or an add-on to another portfolio company?
  • What are clear ways the prospective business can become more valuable to the potential acquirer?
  • How are operations and current team members affected by an acquisition?
  • What is the typical acquisition process, and how long does each stage last?
  • How many LOIs does the potential acquirer write each quarter, and how many does it close?
  • What type of transition periods for founders/leadership are typical?
  • Where does the potential acquirer receive its capital? 
  • What are typical acquisition structures?

Last, you should ask if there is a reference list of past sellers (especially businesses related to your industry) available that you can use to gain other perspectives. Sellers are often vocal about their exit experiences, so searching the web for relevant blog articles, podcasts, etc. from key persons involved in the transition can also provide new perspectives.

Anchor your questions around the last two to three years, because a positive experience 6 years ago, isn’t suggestive of their time and attention now.

If all goes well and you pass this initial call, it’s not over. The firm will set up another call with someone more senior or request preliminary SaaS due diligence data. 

Michael Mason, our Acquisitions Analyst, says that when SureSwift starts the due diligence process, additional preliminary requests will often be made depending on our first call or two with the Founder. For example, we may request details on product usage, customer segments, and conversion reports.

Expect to be prepared to dig up whatever information the firm requests. It may take time, but it’s the best way for the firm to get the full picture of your company. 

The Preliminary SaaS Due Diligence Checklist

saas due diligence

After your initial call, the firm will reach out to you if they decide to move forward with the acquisition. So, the next step in the process is to get your documentation together before they send you a preliminary SaaS due diligence request. 

This checklist will help guide you through what you need to present to them. It’s important to note that the process varies from firm to firm. Some firms will send you questionnaires like SureSwift, and others will request a few documents at a time. Generally, it looks like the process we outline below is our process at SureSwift Capital. 

The checklist focuses primarily on financial history, customer and revenue data, sales and marketing, product, and human resources. 

Non-disclosure agreement 

Before you send anything, you need an NDA to protect your company’s intellectual property (IP). Do not forget this step, as accidentally sending internal information without it can result in catastrophic damage in the hands of the wrong company. 

SureSwift sends out our Mutual NDA via HelloSign. We have them review and sign it before sharing additional information. 

If you don’t have an NDA, templates can help you write one. Otherwise, a lawyer can help you draft it. 

Short-overview form 

At SureSwift, we have our Founders complete a short-overview form asking questions about the company like MRR, yearly revenue, a simple breakdown of monthly expenses with currency, profit margin, and more. 

saas due diligence checklist

It’s common to provide three years of historical financial data so investors can understand your revenue mix, cost structure, and current financial position. Be prepared by having all documentation dating back 36 months. 

Profit and Loss (P&L) Statement

We then ask for a P&L showing us figures for the past 36 months. We prefer spreadsheet format, but other companies might have another preference, so it’s best to ask. 

We also ask for details on the seller’s discretionary expenses on the P&L (e.g., owner’s compensation/benefits, rent, travel). Then, we ask for relevant commentary on revenue recognition and non-USD revenue and expenses. 

Org Chart 

An org chart helps investors understand more about your cost structure and how much goes into the people operations side of things. This is where you’ll share the business’s organizational chart with a short description of each team member, excluding their name, the headcount, total compensation, tenure, hours worked per week, and function. You’ll include yourself and all other founders/owners who contribute to the business. This only requires an easy search into the payroll system. 

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Google Analytics Access

Some firms want to view your Google Analytics information to see how well your website performs. If you’re not using Google Analytics, they’ll want to see whatever website analytics tool you have set up. This lets them see your advertising ROI and track your video, social networking sites, and applications, including your active users, demographics, conversion data, and more. 

SaaS Revenue Metrics

You’ll share any additional revenue metrics you haven’t already shared, such as ARR, MRR, Churn rates, CLV, renewal rates, revenue retention, MRR, and additional growth rates. 

Tech Information

Some firms may ask for information about the technology you use, such as the project management software and more. 

At SureSwift, we have a form our potential sellers fill out because we place a considerable emphasis on tech and compliance review before offering an LOI (Letter of Intent). This is because issues with tech and compliance can be a quick deal breaker, and we prefer writing strong, highly dependable LOIs that we do not have to walk away from or renegotiate. 

Pushing some of this review earlier in the process can save lots of time and resources. If possible, we sometimes even like to do a quick code review before writing an LOI.

Compliance Form

Then, the firm may ask compliance questions about how you handle security and customer data. 

Letter of Intent (LOI)

If the due diligence satisfies the firm, they’ll send you a formal Letter of Intent stating the broad terms of the potential definitive agreement, such as the purchase price and form of consideration. 

An LOI is typically, though not always, a non-binding agreement. It’s just meant to solidify any discussions leading up to this point and also provide you, the seller, with a clear outline of what the buyer can offer. 

The non-binding LOI sets you up for a deeper due diligence process so once it’s received, the firm will set up a data room for you and will provide further detail and additional requests for sensitive information. 

During this time, we also recommend vetting the investment firm. Contact former Founders through email and ask them if they’d be willing to chat about how the buying process went and what to expect from the investment firm before, during, and after acquisition. Remember, this is your company; you want to sell it to the right firm, so you’ll need to do your own due diligence. 

Deep Due Diligence / Pre-Closing Due Diligence 

After the LOI is when the real detailed due diligence typically begins for private equity acquisitions. Very specific requests related to contracts, documentation, the capital structure, product usage, product development, tech stack, HR, customer reports, accounting policies, and more are requested and analyzed. 

At SureSwift, because we acquire smaller businesses, we like to get most data for analysis pre-LOI. The period after LOI is the kickoff of our deeper due diligence process to have a smooth transition period. 

During this more intense due diligence process, we will conduct an in-depth review of employee and contractor agreements, documentation, prior marketing and growth efforts, and more to understand better how we will manage the business once we take complete ownership. 

The period after LOI and before closing for SureSwift is often more about learning than analyzing. One exception to this is our more detailed tech review that takes place immediately after we get under LOI. We want to make sure the tech can support our vision for the product under our ownership.

A Parting Tip

It is worth highlighting data integrity; acquirers need strong reporting/data quality to have confidence in their analysis (to establish strong revenue and earnings quality). For the size of businesses we are dealing with, having all payments flow through Stripe is ideal and properly setting up and reporting SaaS metrics using a tool like ProfitWell or Baremetrics is important.


Whether you’re acquiring a SaaS business or selling yours, you will likely go through a due diligence process at some point. 

If you’re an acquirer or looking to sell your SaaS business, our team at SureSwift Capital is here to help guide you through this process and answer any questions you may have. Following the tips outlined in this checklist and having the proper documentation in place can save yourself time and stress during the due diligence review process.