Organizing Key Documents

Below is a list of documents you should organize before putting your business on the market. While the majority of these documents will not be requested until due diligence, begin preparing these the moment you decide to sell. Having an organized physical or electronic file of all these documents will put you at a significant advantage and speed up the sale process. It will also reduce the perceived risk to the buyer since buyers always view purchasing an organized business as less risky than purchasing a disorganized business.

• Operations
  • Marketing: Marketing material and/or collateral.
• Third-Party Contracts
  • Premises Lease: Print and have on file the details of the lease for your premises.
  • Supplier and Vendor Contracts: Print all major supplier and/or vendor agreements.
  • Advertising Contracts: Print all key advertising agreements.
  • Insurance Policies: Print all key insurance policies, such as liability, auto, etc.
• Assets
  • Asset List: Compile a complete list of all tangible assets included in the sale.
  • Equipment Leases: Print a copy of all major equipment leases.
  • Inventory List: Print a detailed schedule of all inventory included in the sale. 
• Financial Statements
  • Profit and Loss Statements: Have on hand a copy of the last three years’ P&L statements. This should include a breakdown of revenue by product or service and customer type, and a breakdown of sales by month for the previous three to five years.
  • Adjustments: Provide documentation for all adjustments or add-backs to your financial statements. (This is discussed in more detail in the next section.)
  • Full Accounting: Prepare a general ledger or detailed list of all transactions and expenses or a full accounting file, such as QuickBooks, Z Reports, etc.
  • Financial Budgets and Projections: Keep these updated if they are available.
• Financial/Other
  • Bank Statements: Compile a copy of bank statements for the previous three years. The bank statements should match the profit and loss statements and your federal income tax returns.
  • Merchant Statements: Compile a copy of merchant account statements for your credit card processor for the previous two to three years.
  • Accounts Receivable and Payable Schedule: Print a current AR and AP schedule and make sure it is up to date.
• Tax
  • Tax Returns: Have on hand a copy of federal income tax returns for the previous three years. Ensure they match your P&L statements, or ask your accountant to prepare a reconciliation to ensure any differences can be explained.
  • Sales Tax: Compile sales tax reports for the previous three years.
  • Annual Personal Property Tax Certificate: Create a copy of your annual personal property tax certificate, which will be prorated at closing.
• Staff
  • Staff Schedule: Compile a schedule of owners, officers, employees (with names redacted), independent and/or outside contractors, consultants and their titles, compensation, job descriptions, benefits, length of service, turnover, and compensation benefits.
  • Agreements: Compile all employment, agency, and independent contractor agreements, and other employment-related agreements.
• Legal
  • Entity: Compile any documents dealing with the formation of your entity, such as Articles of Organization, Operating Agreements, LLC Minutes, and a Certificate of Good Status from the Secretary of State.
  • Licenses and Permits: Copies of licenses, permits, certificates, and registrations from all governmental authorities. These may include Resale Permit, Business License, etc.
  • Fictitious Business Name Statement (FBNS): FBNS or Doing Business As (DBA) certificate.
• Technology
  • Website: Ensure your business website is up-to-date and accurate.
  • Web Hosting: Print and have on file a list of all web hosting agreements and documentation.
• Tech and Online Businesses
  • Code Audit: It is likely a buyer will retain a third-party expert to perform a software code audit.
  • Key Metrics: Compile information regarding customer acquisition and retention.