Due Diligence Checklist: Documents Needed to Sell My Business

Documents Needed to Sell a Business

• Business Diligence – The business financials are of utmost importance.

• Financials – You will want to have your monthly financial statements downloaded into an Excel spreadsheet. This should include profit and loss statements, cash flow statements, balance sheets, and changes in owner’s equity for the last three years. In addition, monthly billings by customer, COGS break down, accounts receivable, and accounts payable ageing should also be listed.

• HR – You will want to provide the buyer with an overview of the company personnel structure in an organizational chart, as well as an employee census with payroll information and any employment agreements in place.

• Product – Organize a product roadmap for your buyer. It is important that the buyer understand exactly what your products and services are, how you price them, what marketing materials you have, your go-to-market strategy, and your potential product roadmap.

• IT – Provide a comprehensive overview of your current technology use, including any paid software or programs. Understanding what technology you use to support the business is of critical importance. This should include technology partners, third-party licenses, any internal code and hosting providers as well as network security and cybersecurity.

• Client/Customer – Brief the buyer of your customer base and your target audience profile. Information regarding the history of each major customer, how they were acquired, products and services they use, overall go to market strategy, lead generation sources, current pipeline, recent deals lost, and reasons why they failed should be included here.

Legal Documents Needed to Sell a Business

• Legal – The buyer must have a complete understanding of all legal agreements that impact the business.

• Corporate Governance – Corporate governance documents should include articles of incorporation, shareholder and employment agreements, operating agreements, financing agreements, lease agreements.

• Tax – You will need to supply supporting documents that verify the financial information previously given. You will also need to ensure this document explains the business’ tax considerations. These include tax returns, bank statements, sales by states, and payroll taxes paid.

• Contracts – Any legal contracts impacting the business will need to be shared. These include customer, employee, vendor, partner, or reseller agreements.

• Intellectual Property – In the case of the buyer using the IP, you will want to ensure they understand all regulations and are following proper protocols.

• Litigation/Legal/Compliance – Any litigation outstanding buyer will want full understanding and overall compliance regarding corporate governance, any regulatory bodies, and cybersecurity.

• Insurance – Compile all insurance policies that assess coverage and cost for the buyer’s review.

• Property – Provide the buyer with a list or explanation of all assets they are purchasing or leases assuming.