When selling your business, the due diligence stage allows a potential buyer and their advisors to thoroughly analyze your business. At this point in the sale process, the buyer will likely request a range of documents and information relating to areas such as the finances, taxes, legal history, operations and human resources of the business. Because this stage of the sale process is typically time-limited, it is wise to prepare the various documents and information that are likely to be required before the business is marketed for sale. Some of the documents/information that buyers generally request as part of the due diligence phase include:

  • Historical financial statements (5 years)
  • Historical tax returns
  • Certificates and licenses used in the business
  • List of fixtures and equipment
  • Approximate value of inventory
  • List of employees including tenure, job descriptions
  • Customer lists with a breakdown of customer concentration
  • Copies of facility and equipment leases
  • Copy of the franchise agreement (if applicable)
  • List of loans with balance and payment schedule

Preparing ahead of time forces you to closely examine the inner workings of your business before you sell and gives you time to make any necessary adjustments. It also makes you appear more prepared to your prospective buyer, helping to solidify their initial interest.

If you have any questions about selling your business, contact one of our trusted business advisors today.

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