Seller Resources
Due Diligence When Selling a Business
You've accepted a buyer's Letter of Intent. Here's what happens next — and how EEBB helps you through the process.
You've accepted a buyer's Letter of Intent (LOI) that likely includes a due diligence condition. What happens next? The condition gives the buyer time to review your records, confirm that the business is performing as presented, and understand what they'll be taking over. At Elite Equity Business Brokers (EEBB), we help facilitate and manage the entire due diligence process.
What is due diligence when selling a business?
During due diligence, the buyer and their advisors compare the information they received during the sale process with the records behind it. If the business was presented as having steady earnings, for example, the buyer's accountant may compare the financial statements with sales reports or other supporting records. If an expense was described as a one-time cost, the buyer may ask for an invoice or an explanation. The review also helps the buyer understand how the business operates. They may want to know how much revenue comes from your largest customers, how long your lease has left, or which responsibilities depend on you personally.
How EEBB manages the due diligence process
Once you accept the Letter of Intent, EEBB provides you with an Excel checklist covering most of the information buyers typically request. You and your accountant can work through it together. We also create a private shared drive where you and your accountant can upload the requested documents. Before uploading copies for the buyer to review, redact customer and supplier names and any details that could identify them, such as contact information or logos. Use labels like "Customer A" and "Supplier A" consistently across reports, invoices, and contracts. This lets the buyer verify sales, purchasing costs, and how much the business depends on key relationships while protecting customer and supplier identities. If the buyer requests an unredacted document, discuss with your broker what the buyer needs to verify and when the document should be shared.
What documents do buyers typically request?
The exact list depends on the business. Buyers commonly ask for financial records such as recent year-end financial statements, current year-to-date results, business tax returns, and support for adjustments to reported earnings. Lease and property records such as the signed lease and any amendments, the remaining term, and renewal options. Customer and supplier information such as redacted copies of key contracts, renewal dates, and a breakdown showing how much revenue comes from major customers. Inventory and equipment records such as inventory reports, equipment lists, and details on which assets are owned or leased. Employee and operating information such as key roles, staffing costs, and the day-to-day responsibilities you currently handle.
What happens after due diligence?
If the buyer is satisfied with the review, they formally waive the due diligence condition in accordance with the LOI. The parties can then move toward finalizing the purchase agreement and preparing for closing, subject to any other outstanding conditions. If the buyer has unresolved questions, they may request additional records or clarification before waiving the condition. If the review uncovers a material issue, such as a key piece of equipment that needs replacing, the buyer may propose a change to the price or other terms.
What can you do before you receive an offer?
Start with three things you can gather now. Ask your accountant for your latest year-end and year-to-date financial statements, locate your signed lease and any amendments, and pull together the records that explain unusual expenses or changes in sales. If there's something a buyer is likely to ask about, give your broker the background early so you have time to prepare a clear answer.
Preparing your records before going to market?
For more steps you can take before receiving an offer, see our Preparing Your Business for Sale checklist.
View the Checklist →Ready to Take the Next Step?
If you're considering a sale and want to know what a buyer is likely to ask for in your business, book a confidential conversation with Elite Equity Business Brokers.