You need a comprehensive set of documents to sell your business. These records prove your company’s value, build buyer trust, and keep the sale process on track. When everything is organized, the due diligence process goes faster and you avoid last-minute headaches.
Financial Documents
Your financial documents are the backbone of the sale process. They show if your business is stable, profitable, and worth the asking price. Clean numbers help to reduce buyer hesitation and keep the deal moving.
Working with a transaction advisory service ensures that these key financial documents are accurate, organized, and ready for review. Beyond their accounting expertise, the team will assist with buyer expectations and work to strengthen your position to secure a better deal.
They may also recommend preparing audited or reviewed financial statements to give buyers extra confidence. Audits offer the highest level of credibility, while reviews provide less assurance but still help lower buyer risk. To better understand how an audit or review supports your business sale, see Audit vs Review – Differences Explained.
1. Profit and Loss Statements
Profit and loss statements show your business’s revenue, expenses, and net income over three to five years. Buyers use them to assess your business’s financial performance and profitability, spot trends, and look for growth potential. Clean, consistent P&Ls will validate your income claims.
2. Balance Sheet
A balance sheet summarizes your company’s financial position by listing assets, liabilities, and equity. Buyers review it to understand working capital, debt load, and financial health at a glance.
3. Cash Flow Statements
Cash flow statements break down how cash moves in and out of your business. This gives buyers insight into how operations are funded and whether the business can cover its obligations.
4. Interim Financials
Interim financials are the most recent monthly or quarterly reports that show your business’s current performance. Potential buyers review these, along with your financial statements from the past three to five years, to get the full picture.
5. Bank Account Statements
Buyers review your business bank statements to verify cash balances and spot any irregularities. Consistent, reconciled records help prove your reported income and expenses.
6. Financial Forecasts and Projections
Financial forecasts show expected future revenue, costs, and growth based on realistic assumptions. This gives buyers a window into your strategic direction and helps them assess long-term potential. It also helps the lenders and investors evaluate the business.
7. Debt Schedule
Debt schedules outline current loans, repayment terms, and interest rates. Buyers need this to evaluate liabilities and understand their obligations post-sale.
8. General Ledger and Trial Balances
These reports show every financial transaction and confirm your books are accurate. Buyers use them to verify income, expenses, and your overall financial position.
9. AR and AP Reports
Accounts receivable and payable reports show how you manage cash flow. Aging schedules help buyers assess risk, timing, and working capital needs.
10. Capital Expenditures (CapEx) Summary
A CapEx summarizes recent and planned capital expenditures. This helps buyers assess ongoing investment needs and avoid unexpected costs.
11. Fixed Asset Register
A detailed record of your business’s physical assets that includes purchase date, purchase price, depreciation, current book value, maintenance, and repairs. It shows what’s included in the sale and flags assets that may need repair or replacement.
Tax Documents
Tax documents provide buyers with a clear picture of your tax compliance, obligations, and potential risks.
- Federal and state income tax returns for the past 3–5 years
- IRS correspondence, audit notices, and resolution documents
- Employment tax filings and reports (Forms 940, 941, W-2, W-3)
- Documentation of tax basis for assets or equity
- Net operating loss carryforwards
- Tax credit documentation (e.g., R&D credits, WOTC, Renewable Energy Credits)
- Sales tax filings and exemption certificates
- Tax elections and accounting method statements
- Records of any tax liens or unpaid taxes
- Tax returns for prior owners or related entities, if applicable
Legal Documents
These essential documents confirm ownership, expose liabilities, and show whether the business can be transferred cleanly. The exact records required depend on your business structure. Key documents include:
- Ownership records such as cap tables (ownership breakdowns), stock ledgers, or partnership/member records showing who owns what
- Formation documents like articles of incorporation, operating agreements, or partnership agreements that define your legal structure
- Board or member resolutions approving the sale, when required by owners or directors
- Intellectual property registrations including proof of ownership for trademarks, copyrights, or patents tied to your business
- Licenses, permits, and regulatory approvals that are needed for your business to operate legally
- Contracts and restrictions such as NDAs, non-compete, or non-solicit agreements with employees, vendors, or partners
- Litigation records detailing any past or pending lawsuits that could affect the business value or transfer
Operational Documents
Operational documents show what contracts are in place, who keeps things running, and what assets support your revenue. Prospective buyers will use them to understand how your business works day to day and assess how easily it can keep running after the sale.
- Key contracts such as vendor agreements, customer contracts, leases, and service agreements that support revenue and operations
- Technology and IP Documentation such as software systems, licenses, cybersecurity policies, and IT vendor agreements are especially important for tech or SaaS businesses
- Customer warranties or service guarantees that show any promises made to customers that may continue after the sale process
- Asset list stating what equipment, vehicles, tools, and inventory your business uses day to day
- Employee records including job descriptions, employment agreements, pay structure, benefits (without personal data), and a list of key employees
- Vendor and supplier lists showing key relationships critical to ongoing operations
- Insurance policies for general liability, property, workers’ compensation, and any industry-specific coverage
Two Key Documents to Increase Buyer Confidence
These two documents give buyers confidence and make negotiations smoother by clearly showing your business’s true value.
- Independent Business Valuation: A third-party appraisal that reviews your assets, income, and market position. It shows buyers your asking price is fair and grounded in real numbers. A valuation is a good starting point.
- Quality of Earnings (QoE) Report: This is the gold standard for proving your company’s financial health. It verifies stable profits, removes personal or one-time costs, and breaks down income sources. A Quality of Earnings Report also flags risks like overreliance on a few customers or unsustainable cash needs.
According to Forbes Business Council, business valuations are a key starting point—but a QoE often plays a bigger role in getting deals across the finish line. Even in smaller transactions, buyers now rely on QoEs to clarify earnings and reduce surprises during due diligence.
Buyers Trust Businesses With Clear Documentation
Selling your business requires a lot of documentation. Buyers need clear, accurate documents to understand exactly what they’re getting. When everything is organized and presented clearly, the deal moves faster and with fewer surprises.
A transaction advisory team will help you prepare all the necessary documents. They know what buyers expect and how to present your business at its best. With the right support, you’re more likely to close on time and at a better price.
