Due Diligence Checklist (Seller) — Pre-Listing Prep

□ Reconcile all bank accounts to financial statements — fix any discrepancies now
□ Remove all non-business personal expenses from the books (or document as add-backs)
□ Calculate normalized SDE/EBITDA with documented, defensible add-backs
□ Collect and organize 3 years of signed tax returns (federal and state)
□ Prepare or request clean P&L and balance sheets for 3 years + YTD
□ Identify and explain any significant revenue or expense anomalies
□ Close or reduce any lines of credit you don't plan to transfer
□ Resolve any overdue accounts payable or vendor disputes
□ Collect outstanding accounts receivable — a clean AR aging improves valuation
□ Document the working capital cycle and "normal" working capital level

□ Obtain certificate of good standing from your state of formation
□ Review operating agreement/bylaws — ensure ownership records are current and clean
□ Check for any UCC liens filed against your assets — get them released if paid off
□ Resolve any outstanding litigation, demand letters, or regulatory matters
□ Review all IP registrations — renew any that are expiring; transfer any in an owner's personal name into the business entity
□ Ensure domain names, social media accounts, and email addresses are owned by the business entity (not the owner personally)
□ Compile all executed contracts into a single folder — identify missing or expired agreements
□ Review lease agreement: confirm assignability, personal guarantee terms, and remaining term

□ Document standard operating procedures (SOPs) for all critical processes
□ Create an org chart showing reporting structure
□ List all software, platforms, and subscriptions — document login credentials (store securely)
□ Document supplier contacts and relationship history
□ Identify and document any owner-dependent processes and begin transitioning them
□ Create a vendor contact sheet with all key accounts, renewal dates, and contract status
□ Document any proprietary methods, recipes, formulas, or processes in writing

□ Prepare customer revenue report: annual revenue by customer for 3 years
□ Identify your top 10 customers and document relationship strength
□ Note any customers who are personally tied to the owner and may not transfer
□ Compile all customer contracts — flag those with change-of-control or termination clauses
□ Prepare metrics: customer retention rate, average order value, LTV
□ Document sales pipeline and active opportunities
□ Identify and document recurring vs. project-based revenue

□ List all employees: name, title, start date, compensation (salary + benefits), employment type
□ Identify key employees and assess retention risk post-sale
□ Review employment agreements — flag non-competes that run with the business
□ Ensure all I-9 records are complete and compliant
□ Resolve any pending HR disputes, wage claims, or compliance gaps
□ Confirm payroll tax filings are current (match 941s to payroll records)
□ Consider retention bonuses or "stay packages" for key employees to assure the buyer

□ Request a preliminary valuation from a business broker or M&A advisor
□ Understand your SDE multiple range (industry-specific — typically 2–4x for main street; 4–8x for lower middle market)
□ Identify value drivers to strengthen before listing: revenue diversification, recurring revenue, strong margins, documented processes
□ Identify and address value detractors: customer concentration, owner dependency, declining margins, lease uncertainty
□ Prepare a "seller's narrative" — a 1-2 page overview of the business, its strengths, and the growth opportunity for a buyer
□ Assemble a data room (use a secure document-sharing platform like Docsend, DocuSign, or Dropbox)
□ Prepare a teaser (anonymous summary) and a full CIM (Confidential Information Memorandum)

□ Consult with your CPA on the tax implications of an asset sale vs. stock sale
□ Understand the tax treatment of the purchase price allocation — particularly goodwill vs. equipment vs. non-compete payments
□ Model your after-tax proceeds under different deal structures
□ Identify any state-specific transfer taxes or bulk sales notification requirements
□ Review whether you qualify for installment sale treatment (if accepting a seller note)
□ Discuss estate planning and timing considerations with your attorney

□ Professional data room organized by category (financials, legal, operations, HR, IP)
□ Clean, formatted P&L with add-back schedule
□ Asset list with estimated fair market values
□ Photos of facility and key equipment
□ Customer and vendor testimonials or references (with permission)
□ Signed NDA template ready for all interested parties
□ LOI template (see the BizStackHub LOI Template) ready to review with your attorney
□ Business broker or M&A advisor engaged (optional but recommended for deals >$500K)
□ Seller Disclosure Schedule prepared and reviewed by your attorney