Business Sale Preparation Checklist

Derek Vogt
Dec 9, 2025
4 min read

This checklist is designed to help business owners structure their operations, making the company maximally attractive and easy to transition for a potential buyer.

1. Simple Finances (Clear Revenue & Expenses)

Goal: Ensure financial transparency and ease of audit for due diligence.

1.1. Clean Up Books: Reconcile all accounts, ensuring no personal expenses are mixed with business accounts for the last three years.

1.2. Standardized Reporting: Present profit & loss (P&L), balance sheet, and cash flow statements using GAAP/IFRS standards, showing consistent month-over-month and year-over-year reporting.
1.3. Document Owner's Comp: Clearly delineate the owner's salary, benefits, and any one-off distributions from the rest of the operational expenses.
1.4. Prepare for Quality of Earnings (QoE): Have detailed support for all add-backs (one-time, non-recurring expenses) to justify the adjusted EBITDA calculation.
1.5. Organize Key Financial Documents: Centralize all tax returns, bank statements, major loan agreements, and lease contracts in an organized digital data room.

2. More SOPs Than a Pilot (Repeatable Systems & Processes)

Goal: Prove the business can operate efficiently without constant owner intervention.

2.1. Document Core Operations: Create a Standard Operating Procedure (SOP) Manual detailing every critical process in sales, production/service delivery, and fulfillment.
2.2. Systemize Tech Stack: Map out all software used (CRM, accounting, project management) and document the workflows that connect them.
2.3. Onboarding & Training Materials: Formalize the process for training new hires using the SOPs to ensure consistency and speed of ramp-up.
2.4. Define Workflow Triggers: Clearly define who is responsible for which step, when the task moves to the next person, and the standard time allowance for completion.
2.5. Intellectual Property (IP) Protection: Ensure all proprietary processes, software code, and creative assets are legally documented and protected.

3. Loyal Employees (Tight Hiring Process, People Stay for Years)

Goal: Demonstrate a stable and capable team that will remain post-acquisition.

3.1. Implement Retention Strategies: Establish stay bonuses, long-term incentive plans, or clear career paths for key employees to ensure their continuity through the transition.
3.2. Document Organizational Structure: Create an up-to-date org chart with clear roles, responsibilities, and reporting lines for every position.
3.3. Identify and Train Successors: Ensure that at least one person is trained to cover every critical role, reducing reliance on any single individual (including the owner).
3.4. Formalize HR Records: Ensure all employment contracts, performance reviews, and compensation records are compliant, complete, and easily accessible.
3.5. Key Employee Non-Competes: Secure non-compete/non-solicitation agreements with essential personnel to protect the buyer's investment.

4. Not Run By You (Go on Long Vacations Without Hiccups)

Goal: Decouple the business's daily operations and value from the owner's personal presence.

4.1. Delegate Decision-Making: Empower department heads or managers to make routine, daily decisions without requiring the owner's final approval.

4.2. Remove Owner from Key Roles: Systematically transition out of roles in sales, delivery, and administration, allowing the team to handle them independently.

4.3. Document High-Level Strategy: Create a written 3-5 year strategic growth plan that the management team can execute, showing the buyer a clear path forward.

4.4. Limit Owner Contact with Customers/Suppliers: Introduce account managers and operational leaders to key external contacts so relationships are not solely tied to the owner.

4.5. Take a Real Vacation: The ultimate test: spend 4-6 weeks completely disconnected from the business. If it runs smoothly, you pass this test.

5. Matching Outfits (P&L and Tax Return Match Up)

Goal: Eliminate financial discrepancies and ensure all reported income is verifiable.

5.1. Ensure Consistency: Verify that the Net Income reported on the P&L statement exactly matches the income reported on the corresponding business tax returns.

5.2. Explain Variances: Document and be ready to explain any non-recurring differences between book accounting and tax accounting (e.g., depreciation methods).

5.3. Formal Accrual Accounting: Shift away from simple cash-basis accounting to a more formal accrual method, which provides a more accurate picture of performance.

5.4. Conduct an Internal Audit: Hire an external accountant/CPA to perform a pre-sale review to catch any inconsistencies before the buyer's audit team does.

5.5. Organize All Returns: Assemble copies of all Federal, State, and local tax filings for the last three to five years.

6. Eggs in Many Baskets (No Customer Makes Up More Than 15% of Revenue)

Goal: Diversify the customer base to reduce concentration risk and increase stability.

6.1. Implement Concentration Risk Plan: Establish a formal strategy to onboard new, smaller clients to dilute the percentage of revenue from the top customer.

6.2. Document Customer Contracts: Ensure contracts with top customers are clear, transferable to a new owner, and ideally have long-term renewal options.

6.3. Diversify Geographically/Market: Explore expanding into new regions or adjacent markets to spread risk across different economic conditions.

6.4. Vary Marketing Channels: Don't rely on one lead source; diversify outreach to avoid a single point of failure in acquiring new business.

6.5. Offer Multiple Products/Services: Ensure revenue is generated from a variety of offerings, not just one core product that could become obsolete.

7. Sales Team (In Sales, One Is None)

Goal: Establish a sustainable and diversified engine for predictable future growth.

7.1. Hire and Train Sales Reps: Ensure the business has a functioning sales team that is not reliant on the owner or one single high-performer.

7.2. Document Sales Methodology: Create a formal sales process (lead generation, qualification, closing) that is taught to and followed by the entire team.

7.3. CRM Integrity: Ensure the Customer Relationship Management (CRM) system is clean, up-to-date, and accurately reflects the sales pipeline's size and stage probability.