Offers & due diligence
Your Deal Is Almost Done? A Seller's Due Diligence Checklist Before Closing
A due diligence checklist by area, so that a signed letter of intent actually becomes a closed sale.
By Michael D. Rubin, CEO & Founder · Updated September 2026 · 713 words
A deal is not almost done when the letter of intent is signed; it is almost done when due diligence is finished and nothing important has changed. Due diligence is the buyer's full review of your company's past, present and likely future, and it is when many sales are repriced or abandoned. The best defense is to run the same review yourself before the buyer does.
Both sides have work to do in this stage. The buyer is testing what it was told; you are proving it, quickly and consistently, while the business keeps performing.
Build your team before the buyer builds theirs
The buyer will bring accountants, lawyers and often industry or operations specialists. You need your own: a CPA who knows your books, a transaction attorney and your M&A advisor to coordinate. If you own real estate or significant equipment, an appraiser can be useful too. Meet them before going to market and agree who answers which questions.
Inside the company, choose one person, usually a controller or a trusted manager, to help gather documents under a confidentiality agreement. Keeping the circle that small protects the sale and keeps answers consistent.
The checklist, area by area
Buyers organize their review by subject. Organize your preparation the same way.
| Area | What buyers review | What to have ready |
|---|---|---|
| Financial | Statements vs. tax returns, monthly results against budget, earnings adjustments | Three years of reconciled statements, current monthly results, a documented recast |
| Sales and customers | Revenue by product line, customer and region; pricing and warranties | Customer lists with revenue history, pricing policies, warranty claims |
| Balance sheet | Receivables aging, bad debt, inventory quality, payables | Aging reports, write-off and return policies, inventory counts |
| Operations | Backlog, pipeline, facility efficiency, age of equipment | Backlog report, equipment list with age and condition, maintenance records |
| People | Key employees, likely turnover, pay and agreements | Organization chart, pay summary, employment and non-compete agreements |
| Suppliers | Dependence on key suppliers and their reliability | Supplier list, contracts, history of price changes and shortages |
| Intellectual property | Ownership of trademarks, patents, copyrights and software | Registrations in the company's name, licenses, assignment agreements |
| Environmental | Past use of the site, hazardous materials, contamination | Permits, prior reports, disposal records |
Details that surprise sellers
Some items cause more trouble than their size would suggest. They are worth checking twice before the buyer's team arrives.
- Inventory. Obsolete or slow-moving stock, work in progress without clear costing and inconsistent write-off policies lead to price adjustments.
- Receivables. Old balances that will never be collected overstate both earnings and working capital.
- What is included. Equipment, software or intellectual property owned personally or by a related company, rather than by the business, must be identified and dealt with.
- Environmental issues. Asbestos, lead paint and soil or groundwater contamination can be costly and slow to resolve, and lenders take them seriously.
- Competitive position. Buyers will ask what protects the company from competitors, how its market share compares and what it would cost a newcomer to enter. Have a clear answer.
- Key agreements. Contracts with employees and suppliers that a new owner will rely on should be current, signed and easy to find.
Organize it once, in a data room
Put everything in a secure online data room, organized by the areas above, before you sign the LOI. That lets you answer requests in days instead of weeks, keeps a record of exactly what was disclosed and when, and shows the buyer a company that is well run. Give the buyer's team access in stages, starting with the least sensitive material and adding customer-level detail only as the deal firms up. Update the room as each month closes, and keep a log of every question and answer so nothing is asked twice or answered two different ways.
Our answer on the documents to organize before selling gives a fuller list to work from.
How we see you through due diligence
Due diligence is step eight of our ten-step process, but our preparation for it starts at engagement, with the financial recast and the confidential marketing package. We help you anticipate the buyer's requests, keep the process on schedule, and treat issues as negotiating points before they turn into deal killers. A principal of the firm stays involved through closing. The free valuation snapshot is the easiest place to start.
Where this fitsHow a business sale works, step by step →
Questions owners ask next
Can I hold back some information during due diligence?
You can control the timing and the form. Highly sensitive items, such as customer names or pricing when the buyer is a competitor, are often released late in the process, in summary form or only to the buyer's outside advisors. Refusing outright usually raises suspicion, so agree the approach with your advisor and attorney.
What happens if due diligence finds a problem?
The buyer may ask for a lower price, a larger escrow, a specific indemnity or a change in structure, and occasionally it withdraws. How much a problem costs depends on whether it affects future earnings and whether you disclosed it first. Early disclosure with a proposed remedy usually limits the damage.