The more complete and transparent your information is, the more confidently a buyer can underwrite the business. Every gap you cannot fill—or explain—is a gap a buyer may price as risk.
Use this checklist before you bring in a broker or begin a formal process. Mark each category Green, Yellow, or Red. Green means ready to hand over today. Yellow means it exists but is incomplete, outdated, or informal. Red means it does not exist yet.
1. Financials
- Monthly profit and loss statements for the trailing 3–5 years
- Balance sheets and cash flow statements for the same periods
- General ledger detail—not only summary totals
- Accounts receivable and accounts payable aging reports
- A documented addback schedule with support for every addback
Maintained bookkeeping signals that the business can be understood and transferred. Informal records create uncertainty throughout diligence.
2. Tax Returns
- Federal and state business tax returns for the trailing 3–5 years
- Entity-level returns for any pass-through structure
- Sales-tax filings, where applicable
Buyers use tax returns to reconcile internal reporting and confirm that the books and third-party filings tell a consistent story.
3. Legal & Corporate
- Formation documents, operating agreements, and shareholder agreements
- Current and historical capitalization table
- Business licenses and permits
- Material contracts, leases, and agreements
- Past, pending, and settled litigation
- Corporate minutes and resolutions
4. Employees
- Employee census: name, role, hire date, and birth date
- Current organization chart
- Compensation by role, including bonuses and commissions
- Employment agreements, non-competes, and non-solicits
Tenure and age help reveal concentration of institutional knowledge and potential retirement risk.
5. Customers
- Customer list with revenue by customer
- Signed contracts, term lengths, and renewal provisions
- Churn and retention history
- Pricing history and standing discounts
6. Suppliers & Manufacturers
- Vendor list with spend by vendor
- Contracts with key suppliers and contract manufacturers
- Lead times, minimum-order terms, and exclusivity arrangements
A single critical supplier operating on a handshake can create enough uncertainty to slow or stop a deal.
7. Intellectual Property & Technology
- Proof that the business—not the owner personally—owns its intellectual property
- Assignment agreements from contractors, developers, and agencies
- Current trademarks, domains, and patents
- Software licenses and source-code escrow, where relevant
8. Operations
- Written standard operating procedures for core functions
- Management chart showing who runs sales, operations, and finance
- Software and systems inventory, with administrative access documented
- Tasks that still depend on the owner and a plan to transfer each one
The goal is to show that value resides in the company—not solely in the owner’s daily involvement.
9. Facilities & Insurance
- Real-estate leases or ownership documents
- Equipment list with condition and remaining useful life
- General liability, property, and key-person insurance policies
- Industry-specific environmental or regulatory records
10. Market & Competitive Landscape
- Direct competitors, including approximate size and positioning
- Market size, growth rate, and consolidation activity
- Barriers to entry and sources of defensibility
- A clear explanation of how the business is differentiated
Score Yourself, Honestly
| Rating | Meaning |
|---|
| Green | Current, complete, and ready to hand over today |
| Yellow | Exists, but is incomplete, outdated, or informal |
| Red | Does not exist yet |
Financials: G / Y / R
Tax Returns: G / Y / R
Legal: G / Y / R
Employees: G / Y / R
Customers: G / Y / R
Suppliers: G / Y / R
IP & Technology: G / Y / R
Operations: G / Y / R
Facilities: G / Y / R
Market: G / Y / R