Buyers · Buy-side diligence
Know what you are buying.Before you sign.
Buy-side diligence on a healthcare software target: the quality of earnings, the AI exposure and the team behind the numbers, read before the price is final.
Six desks open, all in healthcare software
How it works
- 01
Scope the target.
What the letter of intent assumes, and what has to hold for the price to hold.
- 02
Read it three ways.
Earnings, AI exposure and the team, each tied to the target's own records.
- 03
Price it on the findings.
A written read of what changes the price, the terms or the decision.
What it covers
Three reads a software target needs now.
Earnings
Quality of earnings
Adjusted earnings traced, reconciled and tied to source records by independent, licensed certified public accountants, engaged separately.
AI
AI exposure on the target
How far AI reaches into the workflows the product supports, whether it could replace the product, and what its AI features cost to serve.
Team
Human capital diligence
Owner dependence, key people, contractor classification, and the retooling the team will need after close.
Why diligence comes first
A quarter of broken deals ended on a finding outside the earnings work.
25.3%
ended on a finding outside the earnings work: a license, a contract, a compliance gap, a customer concentration.
21.3%
ended because the earnings were not what was presented.
14.7%
ended in the renegotiation that followed a finding.
Source: a lower-middle-market deal platform's published study of broken letters of intent, January 27, 2026: seventy-five signed letters that collapsed. Directional, small sample. Read the full note.
What you receive
One read before you price it.
- A quality of earnings from independent, licensed certified public accountants
- The AI exposure read on the target
- A human capital read on the team and owner dependence
- A written summary of what changes the price, the terms or the decision
Questions
What buyers ask first.
Who performs the quality of earnings?
Independent, licensed certified public accountants, engaged separately. Capital Row scopes the work and reads the findings with you.
What if the acquisition uses an SBA loan?
At a purchase price of $3 million or more, SBA rules effective October 1, 2026 require a quality of earnings commissioned by the lender, not prepared for the buyer or the seller. Read the rules.
Can we use it on a deal Capital Row did not source?
Yes, as long as Capital Row does not represent the seller on that deal.