The due diligence checklist for selling your business.

Buyers in a lower-mid-market sale request four categories of information: financial (three years of accounts, 24–36 months of monthly management accounts, revenue by customer), legal (contracts, IP ownership, employment agreements), operational (org chart, SOPs, systems) and commercial (cohorts, customer concentration, pipeline). Assemble all four into a data room before you go to market, in our deals, prepared sellers close weeks faster and give up materially less in late price chips. Due diligence is not an audit you pass or fail. It is the buyer re-underwriting the price they offered, line by line, and every question you cannot answer quickly becomes a reason to pay less.

What do buyers actually request in due diligence?

The request list lands days after heads of terms are signed and typically runs to 100–300 items. It looks intimidating. It is actually predictable: across 12 years of sell-side work we see the same four workstreams on every deal, whether the buyer is a trade acquirer, a search fund or private equity.

Financial

• Three years of annual accounts, plus the current year to date.
• 24–36 months of monthly management accounts: P&L, balance sheet and cash flow, reconciled to bank statements.
• Revenue by customer by month, the single most requested schedule, because it exposes concentration and churn instantly.
• Aged debtors and creditors, VAT and tax filings, loan and lease schedules.
• An adjusted EBITDA bridge with evidence behind every line. If your add-backs are undocumented, read our guide to defensible adjusted EBITDA add-backs before anything else, each rejected add-back costs 3x–6x its value in price.

Legal

• Signed contracts with your top customers and suppliers, with change-of-control clauses flagged.
• Proof the business owns its IP: trademark registrations, domains, and assignments from any founder or freelancer who wrote code or created brand assets.
• Employment contracts for every member of staff, contractor agreements, and any consultancy arrangements with the owner.
• Property leases, licences, litigation history, cap table and statutory registers.

Operational

• An org chart with roles, salaries, tenure and reporting lines.
• SOPs for the processes that generate revenue, enough that a buyer believes the machine runs without you.
• A systems list: every platform the business runs on, who holds admin access, and what it costs.
• Key supplier terms, lead times and any single points of failure.

Commercial

• Cohort analysis: revenue retention by customer vintage.
• Concentration analysis: top one, five and ten customers as a percentage of revenue and gross profit.
• Pipeline with stage, value and historical conversion rates.
• Pricing history and churn, split by product or service line.

How do you build a data room before you need it?

Start six to twelve months before you plan to go to market. Set up a folder structure that mirrors the four workstreams above, number every document, and assign one person to own it. Then do the highest-leverage task first: reconcile your management accounts to your bank statements and your filed accounts. Most late-stage price reductions trace back to numbers that do not tie together, not to numbers that are bad.

Refresh the room monthly so it is never more than 30 days stale. A seller who answers a 200-item request list in days rather than weeks changes the psychology of the deal: the buyer stops hunting for problems and starts protecting their position in the process. That preparation discipline is a large part of why 80% of the mandates we take at Leprince Group reach close, our sell-side process builds the data room before a single buyer is contacted. For the broader work of getting exit-ready, see our guide on preparing your business for sale.

Which red flags kill deals late?

Buyers rarely walk over a single issue. What kills deals, or cuts prices 10–30% at the worst possible moment, is discovering issues late that the seller should have disclosed early. The recurring ones:

• Revenue that does not reconcile. Management accounts, filed accounts and bank statements telling three different stories.
• Add-backs that collapse under questioning. A £100k add-back rejected at a 5x multiple is £500k off the price, plus the credibility damage that infects every other number.
• Concentration surprises. A top customer quietly at 35% of revenue, revealed only when the customer schedule lands.
• Missing or unsigned contracts with the customers that matter, or change-of-control clauses that let them walk at completion.
• IP owned by the wrong entity. Trademarks in the founder's personal name, code written by freelancers with no assignment.
• Trading that declines during diligence. The owner is buried in document requests, sales slip, and the buyer re-prices off the new run rate. This is the strongest argument for preparing the room before you need it.

What does a diligence-ready business look like in numbers?

• Accounts. Three years filed, monthly management accounts produced within 15 days of month end, fully reconciled to bank.
• Concentration. Top customer under 20% of revenue, top five under 40%. Above those lines, expect deferred consideration or an earn-out to bridge the risk.
• Contracts. Signed agreements covering the customers that generate at least 80% of revenue, with change-of-control terms mapped before buyers ask.
• Multiples at stake. Typical lower-mid-market ranges: consumer brands and services 3.5x–9x EBITDA, agencies 3.5x–7.5x, distribution 3.5x–7x, software 6x–15x EBITDA. Below roughly $500k of earnings, buyers price on SDE at about 1.8x–4.2x. Every diligence finding moves you within, or below, your band.
• Timeline. A prepared seller builds the data room in 2–4 weeks; diligence itself runs 6–12 weeks. Every extra month of delay raises the odds of a re-trade or a lost buyer.
• Owner dependence. The business runs for two weeks without you, and someone other than you owns each major P&L line.

Where you sit in your multiple band depends on how these numbers read together, our piece on how to value a consumer business shows the mechanics.

What to do next

Before you build the data room, know what the business is worth today: run our free 10-question indicative valuation to see your likely multiple band and what is dragging it down. Then start assembling the four workstreams above, oldest documents first. If you are within 12 months of a sale, talk to us before you open the room to any buyer.

Frequently asked questions