Why “Trust but Verify” Fails in M&A Due Diligence?
I think the phrase “trust, but verify” is a bit overrated.
In M&A due diligence, it should really be trimmed down to just:
Verify.
In my line of work, one of the biggest sources of delay comes from a lack of direct access to the seller’s accounting data. For whatever reason, usually not a great one, the seller assumes that what they’ve provided is enough to support the entire quality of earnings (QoE) process.
Instead of direct access to QuickBooks or another accounting system, I’m left working with unformatted PDFs, incorrect exports, or curated reports. As this flows through the process, the buyer ends up making a decision based on potentially incomplete information.
I have a very simple proposal.
A New Standard for Quality of Earnings (QoE)
No buy-side QoE without direct access to the accounting system.
There are roughly 20 providers consistently working on sub-$5M revenue deals. We’ve all run into the same inefficiencies over and over again.
At some point, patterns become predictable.
And when they’re predictable, they’re fixable.
How Lack of Data Access Slows Down M&A Deals
Right now, the process often turns into a back-and-forth chain of emails and requests that still results in incomplete data.
I’ve spent weeks chasing information that could have been pulled directly from QuickBooks in minutes.
For example, instead of reviewing a full general ledger export, I’ll receive a PDF summary that doesn’t tie out cleanly. That leads to follow-up questions, revised files, and more delays. What should be a quick validation turns into a multi-week process.
Rather than a clean QoE, it becomes a slog.
The ABCs are supposed to be “always be closing,” not “always be CC’ing more people for access.”
Why QoE Providers Should Enforce Direct Access
And yet, we keep accepting this as part of the process.
If the ~20 providers who regularly work on these deals aligned around a single rule, the issue would disappear quickly.
No access, no QoE.
That one standard would eliminate:
- PDFs and reconstructed financials
- Incomplete datasets
- Unnecessary delays
More importantly, behavior would change.
If buyers, brokers, and sellers knew that direct system access was required across providers, expectations would shift immediately. What feels like a negotiation today would become standard operating procedure.
In an industry that is still relatively new and unregulated, clear expectations matter.
Pricing Inefficiency in Financial Due Diligence
If we’re not willing to hold that line, then we should at least price the inefficiency.
There should be a premium when sellers choose the “no access, just trust us” route.
The additional friction creates real costs:
- More manual work
- Longer timelines
- Increased risk of missed issues
Both buyers and sellers should expect to absorb those costs.
Why This Change Benefits Buyers, Brokers, and Lawyers
This shouldn’t be a controversial idea.
Everyone involved benefits from better access to data.
- Lawyers get fewer delays and cleaner processes
- Brokers get shorter timelines and more predictable closings
- Buyers get higher confidence and fewer surprises
Better inputs lead to better outcomes.
How to Improve M&A Due Diligence: Start with the LOI
For buyers and advisors, this starts with one simple step:
Require direct access to the accounting system in the LOI.
Make it clear from the beginning that summaries, PDFs, and hand-selected reports are not enough.
Direct access is the standard.
Once that expectation is set early, the rest of the process becomes significantly more efficient.