What buyers will ask for, and when
Nearly every buyer asks for the same 12 things in roughly the same order. Preparing them in that order turns diligence from an interrogation into a checklist.
The first ask, every time
Three years of profit and loss. It arrives before anything else in almost every conversation, and how fast you send it sets the tone for the rest of the deal. Have it ready as a PDF and a spreadsheet, monthly if you can.
The 12 documents
- Profit and loss, three years, monthly if available.
- Balance sheet, most recent.
- Tax returns for the same three years.
- Add-back schedule with each item explained.
- Revenue by customer, anonymized.
- Revenue by channel or product line.
- Customer contract terms and renewal dates.
- Employee census: roles, tenure, compensation bands.
- Property lease with the assignment clause.
- Equipment schedule and maintenance status.
- Supplier terms and any exclusivity.
- Process documentation for the owner’s own tasks.
What they are really checking
Questions behind the documents
A document request is usually a question in disguise. "Can I see revenue by customer" means "am I buying one relationship or 40". "Can I see the lease" means "does my payback period fit inside the term". Answering the underlying question in your covering message saves a round trip and reads as confidence.
Where deals get repriced
- Customer concentration higher than the listing implied.
- Add-backs that turn out to be recurring costs.
- A lease that cannot transfer on current terms.
- Key staff who were not aware and are now leaving.
- Working capital lower than the business actually needs to run.
Every business has one. Raised by you in week one it is a known quantity; found by a buyer in week six it is a reason to renegotiate.
Preparing add-backs properly
List every add-back as a line with an amount and a one-sentence reason a new owner would not incur it. Vehicle, family salary, one-off legal, personal travel. Anything that appears three years running is an operating cost and should not be added back — claiming it anyway costs you credibility on the whole schedule.