Acquisition audit: complete guide to M&A due diligence for SMEs in 2026

The acquisition audit, commonly called due diligence, is the in-depth investigation procedure carried out by the acquirer before finalizing a company buyout or external growth operation. It constitutes an irreplaceable decision-making tool: it makes it possible to test the reliability of the information transmitted by the seller, to identify real risk areas, to better calibrate the valuation and to secure contractual guarantees.

In France, the acquisition audit falls within a specific legal framework. The asset and liability guarantee (GAP), governed by the general provisions of the Civil Code and the contractual clauses negotiated between parties, is directly informed by the findings of due diligence. The Commercial Code (in particular L235-1 to L235-12 for company nullities) also delimits the legal risks to be mapped when reviewing the constitutive documents and the decisions of meetings.

A transaction carried out without serious due diligence exposes the buyer to unmeasured risks which frequently materialize in the 12 to 24 months post-acquisition: unfunded tax or social adjustments, ignored customer or employee disputes, overvalued stocks, undeclared environmental liabilities, excessive dependence on a manager or a customer.

The acquisition audit is not intended to kill the transaction: it allows us to understand it lucidly. The results of well-conducted due diligence directly feed into:

• the price: adjustment of the transfer price based on identified risks and potential liabilities
• contractual guarantees: calibration of the asset and liability guarantee (GAP) and the declarations and guarantees (reps & warranties)
• conditions precedent: certain findings may condition the completion of the transfer
• the integration plan: priority post-closing actions are identified during the due diligence phase

Phase 1: Financial and accounting due diligence

This is the heart of the process. The accountant or financial advisor analyzes in depth:

Quality of earnings: is the EBITDA displayed recurring and defensible? This review includes the restatement of non-recurring items (capital gains from sales, exceptional charges, atypical executive remuneration), the normalization of operating expenses, and the verification of the consistency between accounting results and cash generation. Normative working capital requirement: what is the company's actual WCR, and how does it change depending on seasonality and growth? An underestimated WCR in the transfer price can generate an immediate post-closing financing need.

The balance sheet structure: debt levels, real assets vs. net book values ​​(particularly on fixed assets), provisions made or missing, off-balance sheet commitments (guarantees, pledges, uncapitalized leases).

Cash flows: the analysis of cash flows for the last 3 financial years makes it possible to distinguish the generation of operational cash from that linked to the seller's management decisions (delayed payments, reduction in maintenance investments).

Phase 2: Tax due diligence

This is often the source of the most significant liabilities. The tax review covers:

• Analysis of the last 3 fiscal years: IS, VAT, CFE/CVAE, CVAE, tax returns
• Identification of aggressive or uncertain tax positions: transfer pricing, deductibility of certain charges, potential recharacterization of income
• Verification of the conformity of BSPCE, AGA and other employee shareholding schemes if existing
• Examination of tax conventions applicable in the event of cross-border activity
• Review of previous tax audits and their resolution

Unprovisioned tax risks are typically one of the first subjects of negotiation of the asset and liability guarantee.

Phase 3: Legal and contractual due diligence

This phase, conducted in coordination with an M&A lawyer, covers:

• Review of constitutive acts, statutes, shareholders' agreements: verification of the validity of resolutions, absence of blocking clauses
• Analysis of strategic commercial contracts: customer contracts (mergers, change of control clauses), supplier contracts, IP licenses
• Inventory of ongoing litigation and potential litigation risks
• Intellectual property: trademarks, patents, software rights, domain names
• Regulatory compliance: administrative authorizations, licenses, sectoral certifications

Checking change of control clauses in customer contracts is critical: some contracts provide for automatic termination or a right of option in the event of a transfer, which can call into question the very value of the target.

Phase 4: Social and HR due diligence

Social risks are often underestimated by uninformed buyers:

• Analysis of the payroll: age pyramid, turnover, manager's discretionary bonuses
• Review of employment contracts for key executives and non-competition clauses
• Verification of company agreements, NAO, staff representation
• Audit of social declarations: DSN, URSSAF, supplementary pension contributions
• Identification of dependencies on key figures (key man risk)

Concrete example: in a service SME with 80 employees, the discovery during due diligence of 12 consultant contracts reclassifiable as permanent contracts and late URSSAF contributions led to a 15% price reduction and a specific GAP clause covering the 36 months following closing.

Phase 5: Operational and strategic due diligence

This phase completes the financial vision with a business reading:

• Analysis of the customer base: concentration, recurrence, satisfaction, current tickets
• Evaluation of the /services product portfolio: maturity, differentiation, competitive threats
• Review of operational processes: production capacity, supplier dependencies, information systems
• Analysis of competitive positioning and market prospects

A well-organized data room should contain:

Certain signals should systematically trigger an in-depth investigation:

• Very variable results from one year to the next without a logical explanation of the activity cycle
• High customer concentration: a customer representing more than 20-30% of turnover is exposed to a critical concentration risk
• Absent or undersized provisions for disputes, guarantees, inventory depreciation
• Cash flow much lower than profit over several financial years (indicator of manipulation of WCR or profit)
• High turnover of teams or recent resignations of key profiles
• Multiple changes of accountant or auditor in the last 5 years
• Change of control clauses in the first 3 customer or supplier contracts

Hayot Expertise Advice: a good acquisition audit is not intended to kill the transaction. It must make it possible to better understand it, to better quantify it and to better secure it. The findings serve to rebalance the negotiation — not to put an end to it. A well-advised buyer enters the final negotiation with a precise risk map and solid contractual levers.

Typical deadlines:

• Light financial due diligence (SME < €5M turnover): 2 to 4 weeks
• Complete due diligence (SME 5-50 M€ turnover): 4 to 8 weeks
• Large SME/ETI due diligence: 6 to 12 weeks

Indicative costs (consulting fees, excluding lawyers):

• Financial due diligence alone: €8,000 to €25,000 excluding tax depending on complexity
• Complete due diligence (financial + tax + social): €20,000 to €60,000 excluding tax
• Bpifrance missions (external growth consulting mission): co-financing possible up to 50%

These costs must be compared to the transaction price and the risk avoided: due diligence having revealed a tax liability of €300,000 on a target valued at €2 million represents a considerable return on investment.

To go further on the analysis tools: strategic SME audit, forecast income statement and anticipate a tax audit.

We support managers and investment funds in their external growth operations: structuring financial and accounting due diligence, coordination with M&A lawyers, analysis of the quality of results, calibration of the GAP and post-closing recommendations.

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