# The Due-Diligence Readiness Checklist

A buyer will ask for about 60 documents, and the speed and order you produce them is itself a signal. A seller who hands over clean, indexed records in a week reads as a business worth trusting. A seller who takes a month and sends files piecemeal reads as risk, and risk comes out of the price. This checklist is the room a buyer will demand: fill the status columns honestly now, close the gaps before you take a meeting, and you walk into diligence already ready.

Status uses three words, and only three: **Ready** (the document exists, is current, and you could send it today), **In progress** (being gathered or updated), and **Gap** (does not exist yet, and someone owns closing it). The filled example is Ridgeline Heating & Air. Copy the tables, replace the example rows with your own, and drive every row to Ready.

> A buyer does not pay for what you say. They pay for what you can prove in the data room.

## 1. Financials (the first thing they read)

Nine documents, and this is where a deal is won or lost. If these are clean, the rest of diligence is a formality. If they are messy, the buyer discounts everything else.

| Document | Status | Where it lives | Owner | Notes |
|---|---|---|---|---|
| P&L, last 3 fiscal years | Ready | QuickBooks Online | Bookkeeper | Reconciled, matches tax returns |
| Balance sheet, last 3 years | Ready | QuickBooks Online | Bookkeeper | Current within 30 days |
| Business tax returns, 3 years | Ready | CPA portal | CPA | Signed and filed |
| Trailing-12-month P&L, monthly | In progress | QuickBooks Online | Bookkeeper | Rebuilding 2 months of splits |
| A/R aging and A/P aging | Ready | QuickBooks Online | Bookkeeper | As of month-end |
| Add-backs schedule (adjusted SDE) | In progress | This kit + CPA | CPA | See add-backs-worksheet.xlsx |
| Bank statements, 12 months | Ready | Bank portal | Owner | Business account only |
| Depreciation schedule | Ready | CPA | CPA | Ties to the tax return |
| Payroll summary, 12 months | Ready | Payroll provider | Bookkeeper | By employee and role |

## 2. Corporate and legal

Seven documents that prove the business is what you say it is and that it can be sold cleanly.

| Document | Status | Where it lives | Owner | Notes |
|---|---|---|---|---|
| Articles of organization / incorporation | Ready | State filing + binder | Attorney | LLC in good standing |
| Operating agreement / bylaws | Ready | Corporate binder | Attorney | Current, signed |
| Cap table / ownership record | Ready | Corporate binder | Owner | Single member |
| Certificate of good standing | In progress | Secretary of State | Attorney | Ordering current copy |
| Any pending or past litigation | Ready | Attorney file | Attorney | One settled dispute, 2024, documented |
| EIN letter and state tax IDs | Ready | Corporate binder | Owner | Original IRS letter |
| Franchise or DBA filings | Ready | Corporate binder | Owner | DBA "Ridgeline HVAC" on file |

## 3. Contracts and agreements

A buyer reads these for revenue that transfers and for any change-of-control clause that lets a customer or vendor walk when you sell. Eight items in the example.

| Document | Status | Where it lives | Owner | Notes |
|---|---|---|---|---|
| Customer maintenance agreements | Ready | CRM export | Service Manager | 218 active plans |
| Top-10 customer contracts | In progress | Shared drive | Service Manager | 3 need signed renewals |
| Supplier and vendor agreements | Ready | Shared drive | Office Manager | 2 primary parts suppliers |
| Equipment leases / financing | Ready | Corporate binder | Owner | 3 trucks financed |
| Change-of-control clauses flagged | Gap | (review needed) | Attorney | Have counsel review each contract |
| Subcontractor agreements | Ready | Shared drive | Office Manager | 2 electrical subs |
| Software / SaaS agreements | Ready | Shared drive | Office Manager | CRM, accounting, dispatch |
| Non-compete / non-solicit (staff) | Gap | (does not exist) | Attorney | Draft for key staff before sale |

## 4. Operations and systems

This is where owner dependence shows up in black and white. A buyer counts your written SOPs against the number of things only you can do. Six items.

| Document | Status | Where it lives | Owner | Notes |
|---|---|---|---|---|
| Core SOPs (top 5 workflows) | In progress | Shared drive | Service Manager | 3 of 5 written; see A-cluster |
| Pricing / estimating procedure | Ready | Shared drive | Service Manager | From the 90-day plan |
| Decision routing table | Ready | Shared drive | Service Manager | Owner-only items excluded |
| Org chart with roles | Ready | Shared drive | Owner | Roles named, not just people |
| Key-vendor and key-account list | Ready | CRM | Service Manager | With relationship notes |
| Owner-dependence baseline | Ready | This kit | Owner | 55 to 44 hrs, tracked |

## 5. People

Five items. A buyer needs to know the team stays and what it costs.

| Document | Status | Where it lives | Owner | Notes |
|---|---|---|---|---|
| Employee roster with roles and pay | Ready | Payroll provider | Bookkeeper | 11 employees |
| Org chart and reporting lines | Ready | Shared drive | Owner | 1 manager, 2 crew leads |
| Benefits summary | Ready | HR file | Office Manager | Health, PTO policy |
| Key-employee agreements | Gap | (does not exist) | Attorney | Retention plan for the manager |
| Contractor vs employee classification | Ready | CPA | CPA | Reviewed, compliant |

## 6. Assets, property, and coverage

Eight items covering what the business owns, where it operates, and how it is insured and licensed.

| Document | Status | Where it lives | Owner | Notes |
|---|---|---|---|---|
| Fixed-asset list (trucks, tools, equipment) | Ready | CPA schedule | Bookkeeper | Ties to depreciation |
| Vehicle titles and registrations | Ready | Corporate binder | Owner | 5 vehicles |
| Facility lease | Ready | Corporate binder | Owner | Shop, 3 years left |
| Property insurance | Ready | Insurance file | Office Manager | Current policy |
| General liability insurance | Ready | Insurance file | Office Manager | Certificate available |
| Workers' comp insurance | Ready | Insurance file | Office Manager | Current, no open claims |
| State contractor license(s) | Ready | Corporate binder | Owner | HVAC license current |
| Local permits and registrations | In progress | Corporate binder | Office Manager | Renewing one county permit |

## Read the room, then close the gaps

Count your rows. In the example there are 43 documents across the six categories: 34 Ready, 6 In progress, and 3 Gap. The three gaps (change-of-control review, staff non-competes, and a key-employee retention agreement) all have an owner and are the punch list before any meeting. Drive every row to Ready and diligence becomes a week, not a fight.

Two rules keep you safe. First, redact and hold the sensitive material (customer names, employee pay, supplier pricing) behind a signed NDA, and hold the deepest items until a letter of intent. Second, index everything, which is the job of `data-room-index.md` in this kit.

This checklist is general business education, not legal, tax, or accounting advice. Have a licensed attorney review every contract and change-of-control clause, and a CPA confirm the financials, before you sell. Get your estimated sale price and three scores, free, at https://app.trykeystone.io.
