Seller Due Diligence Preparation
Organize financial and operating records, contracts, ownership information, dependencies, and transition questions for a controlled sale process.
Create an indexed readiness folder, a disclosure issue log, an access protocol, and an advisor-led plan for responding to diligence requests.
Who this is for: Business owners considering a sale who want to identify record gaps and protect confidential information before responding to buyer requests.
Start with current evidence.
- 01
Period-matched financial statements, tax returns, bank reconciliations, and supporting ledgers.
- 02
Ownership, entity, license, property, insurance, debt, and contract records as applicable.
- 03
Customer and supplier concentration, recurring revenue terms, employee roles, and operating procedures.
- 04
List of open disputes, liabilities, renewals, pending obligations, and known record discrepancies.
- 05
Advisor-approved confidentiality and secure document access process.
Move through the work.
Each step names the action and what completion looks like. Record assumptions and unresolved questions as you go.
- 01
Assign a controlled document owner
Name who maintains the source index, approves release, and coordinates with legal, tax, accounting, and transaction advisors. Establish secure storage, role-based access, version history, and a process for withdrawing access.
COMPLETE WHENEvery requested item has one owner and access is limited to approved participants.
- 02
Reconcile financial records by period
Organize statements, tax returns, bank activity, general ledger, debt, payroll, and major contracts by matching period. Document differences, amended filings, nonrecurring items, and unsupported adjustments for advisor review rather than rewriting source records.
COMPLETE WHENThe index points to source documents and each material reconciliation issue is logged.
- 03
Map operational dependencies
Document key customers, suppliers, employees, systems, licenses, real estate, equipment, and owner-held knowledge. Note contract assignment or change-of-control questions for legal review and identify transition support that may be required.
COMPLETE WHENMaterial dependencies have a current owner, source record, and transfer question.
- 04
Create an issue and request log
For each buyer request, record scope, date received, owner, approved response, source version, access granted, open question, and response date. Log known problems consistently and route disclosure decisions to qualified counsel.
COMPLETE WHENNo request is answered from memory or by an untracked file attachment.
- 05
Prepare a transition and access plan
Separate information needed for evaluation from information needed after closing. Agree with advisors on redaction, staged access, employee/customer notification timing, and any transition services before sharing sensitive material.
COMPLETE WHENA written access plan protects confidential records and identifies approvals before release.
What changes the next move?
- Preparation does not promise a sale, price, or buyer outcome; it makes evidence and open questions easier to review.
- Do not alter or destroy source business records to make them appear more consistent.
- Use qualified legal, tax, and transaction professionals to decide disclosure, privilege, transfer, and retention issues.
Keep these visible.
- Sending unredacted sensitive files through an unapproved channel.
- Creating unsupported earnings adjustments or silently replacing source records.
- Sharing customer, employee, or contract information before access and confidentiality terms are reviewed.
Check, assign, and continue.
Mark items as you verify them. Your selections stay in this tab and are not sent or saved.
Check the current source.
- IRS: Recordkeeping ↗
IRS explanation of business records and supporting documentation; ask tax advisors about the records and retention periods relevant to the seller.
This playbook is general operating guidance. It does not verify records, replace qualified professional advice, determine eligibility, or guarantee a financial outcome. Review current contracts, source records, and applicable requirements with the responsible professional.
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