Use this checklist to help prepare your organization for a potential sale. Addressing these items early can help streamline the due diligence process, maximize valuation, and reduce the risk of deal fatigue.

Financial Cleanup & Reporting

• Normalize EBITDA: Identify and document all “add-backs,” such as non-recurring expenses, owner perks, and one-time legal fees, to present adjusted earnings clearly.
• Address Financial Statements: Ensure at least the last 2-3 years of financial statements have been reviewed or audited by a reputable CPA firm.
• Analyze Working Capital: Calculate average working capital requirements to defend your position during negotiations for purchase price adjustments.
• Resolve Aged Receivables: Collect outstanding debts or write off uncollectible accounts to clean up the balance sheet.
• Separate Assets: Remove non-operating assets (e.g., vacation homes, personal vehicles) from company books prior to listing.

Governance & Corporate Structure

• Update Corporate Records: Ensure minute books, bylaws, and operating agreements are current, complete, and fully executed.
• Clean Up Cap Table: verify all stock certificates are accounted for and that ownership percentages match legal documentation perfectly.
• Resolve Outstanding Litigation: Settle or clearly document any pending lawsuits, tax disputes, or regulatory issues.
• Secure Intellectual Property: Confirm all trademarks, patents, and domains are registered in the company’s name, not the founder’s personal name.
• Confirm Licensing: Confirm that the business is properly licensed in all jurisdictions where business is transacted, and ensure that operating permits are valid and renewed.

Contracts & Relationships

• Review Change of Control Clauses: Audit all major customer and vendor contracts for “assignment” or “change of control” provisions that require consent to sell.
• Formalize Key Agreements: Convert handshake deals with top clients or suppliers into written, assignable contracts.
• Secure Key Employee Agreements: Update employment contracts for critical staff, evaluate use of non-solicitation and non-compete clauses, and consider transition bonuses or similar incentives to align employee compensation with the transaction
• Diversify Customer Base: Identify any customer concentration risks (e.g., one client >10% revenue) and prepare a mitigation narrative.
• Lease Review: Ensure facility leases have enough term remaining to be attractive to a buyer or include renewal options.

Due Diligence Readiness (Virtual Data Room Prep)

• Organize Digital Files: Create a structured folder hierarchy for a Virtual Data Room (VDR) covering legal, financial, HR, and operations.
• Scan Physical Documents: Digitize all paper contracts, tax returns, and corporate records.
• Prepare for Diligence and Disclosure Process: Begin drafting lists of exceptions to standard representations (e.g., list of current litigation, list of liens).
• Conduct a Mock Due Diligence: Have your advisors play “devil’s advocate” to identify weak spots a buyer will attack.
• Map IT Systems: Document your software stack, licenses, and cybersecurity protocols to prove scalability and transferability.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice with regard to your situation, you should contact an attorney.