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Seller Guide

Business Sale Due Diligence: What Buyers Will Request

Due diligence is the period after LOI where buyers verify everything you've represented. Surprises kill deals. Here is what they will ask for — organized so you can prepare in advance.

Financial Due Diligence

This is the largest category and the one that produces the most deal complications. Prepare these before LOI so diligence can move quickly.

□3 years of federal tax returns (business entity)
□3 years of monthly P&L statements and balance sheets
□YTD financials for the current year (within 30 days)
□Accounts receivable aging report
□Accounts payable aging report
□Detailed add-back schedule with supporting documentation for each line
□Revenue by customer for each of the last 3 years
□Revenue by product/service line for last 3 years
□Sales by month (seasonality analysis)
□Owner's personal tax returns (last 2–3 years, to verify salary/distributions)
□Bank statements for last 12–24 months
□Any existing business valuation reports
□Outstanding loans, lines of credit, and repayment schedules

Legal and Corporate Due Diligence

□Articles of incorporation / organization (original + any amendments)
□Operating agreement or bylaws
□Current cap table / shareholder/member registry
□List of all states where the entity is registered to do business
□All pending or threatened litigation, regulatory actions, or disputes
□Any existing judgments, liens, or UCC filings against the business
□Prior legal settlements (with NDAs lifted for buyer review where possible)
□Insurance certificates — general liability, E&O, workers comp, umbrella
□Intellectual property registrations (trademarks, patents, copyrights, domain names)
□Any non-compete or non-solicitation agreements with prior employees or sellers

Contracts and Customer Agreements

□All material customer contracts (signed copies)
□Standard form service agreement (if you use one)
□Any contracts with assignment restrictions or change-of-control provisions
□Top 20 customer relationships — revenue, contract status, tenure, contact
□All supplier and vendor agreements (with pricing terms)
□Distribution or reseller agreements
□Software license agreements (SaaS subscriptions, on-premise licenses)
□Any exclusivity or preferred provider arrangements
□Equipment leases or financing agreements

Real Estate and Facilities

□Lease agreement (current, with all amendments and extensions)
□Lease assignment clause — does it allow transfer? Does it require landlord consent?
□Remaining lease term and renewal options
□Current rent vs. market rate analysis
□Any owned real estate: title, mortgage, survey, environmental reports
□Maintenance and repair history for the facility
□Certificate of occupancy and any required permits

Human Resources and Employment

□Employee roster: names, titles, tenure, compensation (salary + benefits)
□Organizational chart
□Employment agreements for key employees
□Non-compete and confidentiality agreements with employees
□Employee handbook (current version)
□Benefit plan summaries (health, dental, 401k, PTO policy)
□Workers compensation claim history (last 5 years)
□Any current or pending EEOC charges, wage disputes, or HR complaints
□I-9 compliance status (especially relevant for industries with seasonal/immigrant labor)
□Independent contractor agreements and 1099 classification documentation

Operations and Assets

□Complete equipment and vehicle list with ages, condition, and book value
□Maintenance records for key equipment and vehicles
□Inventory detail and valuation methodology (if applicable)
□Technology systems: software stack, ERP/CRM, how data transfers
□Licenses, certifications, and permits — list all with expiration dates
□Any government or regulatory approvals required to operate
□Trade association memberships
□Key operational metrics: revenue per employee, utilization rates, etc.

How to Organize Your Due Diligence Response

The best approach is to create a virtual data room — a secure shared folder (Google Drive, Dropbox, or a dedicated VDR service like Firmex or Intralinks) organized by category. This lets your broker and attorney control access, track what buyers have reviewed, and add documents as requested without email chaos.

Sellers who respond quickly and completely to due diligence requests keep buyers engaged. Slow or incomplete responses create uncertainty, give buyers time to lose interest, and sometimes signal that the seller is hiding something — even when they're not.

Work with a broker who manages due diligence

An experienced broker will organize your data room, manage buyer requests, and keep the diligence process on track. Get matched with a specialist.

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