What documents do you need to sell a business?
Financials, leases, contracts, employee records, asset register and licences. The documents a buyer will ask for, and how to organise them before you start.
General information only, not financial, legal or taxation advice. Tony Pope holds Queensland Office of Fair Trading licence 4963575.
The short version
- Buyers ask for the same core set of documents in almost every sale, so it can all be prepared in advance.
- Three years of financials plus year to date is the standard expectation.
- Every add back needs a document behind it. Undocumented add backs get struck out.
- Assembling documents before going to market shortens due diligence, and long due diligence is where deals die.
- Licences and registrations that do not transfer automatically need to be identified early.
Buyers ask for much the same set every time, which means it can all be assembled in advance. Doing so is one of the highest value things you can do before going to market, because it shortens due diligence, and long due diligence is where deals die.
Financial documents
Three years of financial statements and tax returns, plus year to date figures. A schedule of add backs with a document supporting each one. Business activity statements. An aged debtors and creditors listing. Access to the accounting file during due diligence.
If a figure cannot be traced to a source document, expect it to be discounted or removed.
Lease and property documents
The current lease including every variation. Any options and the exact mechanism for exercising them. The assignment clause. Make good obligations. Any personal guarantee and whether it releases on assignment, because frequently it does not.
Landlord consent to assign is required in almost every case and it is a common source of delay, so start early.
Customer and supplier contracts
Anything material in writing. Check each one for a change of control clause, which can allow the other party to walk when the business is sold.
Where important arrangements are not documented at all, say so early. A buyer will handle a disclosed gap far better than a discovered one.
Employee records and entitlements
A staff list with roles, start dates, pay rates and the applicable award or agreement. Current employment agreements. Accrued leave and long service leave balances.
Entitlements are a real number in the settlement calculation and how they are treated is negotiated, so know your position before you agree terms.
Asset register and finance payouts
A current list of plant, equipment and vehicles with realistic market values rather than book values, which are routinely wrong in both directions. Payout figures for anything under finance. Service history for major items. Stock on hand with an honest view of what is aged or obsolete.
Licences, registrations and intellectual property
Any licence the business operates under, the domain names, the business name registration, trade marks, and the software the business runs on. Some transfer with the sale and some require the buyer to qualify in their own right. Identify which is which early.
Sale process documents
The confidentiality agreement signed by each buyer before identifying information is released. An information memorandum. Heads of agreement or an offer setting out the commercial terms. The contract of sale, prepared by a solicitor. You should have your own solicitor acting for you.
How to organise it all before you go to market
One folder, subfoldered by the categories above, with a simple index. Scanned, legible, current.
It sounds mundane. In practice it is one of the clearest signals a buyer receives about how the business is run, and it removes weeks from the part of the process where deals are most fragile.
Common questions
How far back do financial records need to go?
Three full financial years plus year to date is the standard expectation. Less than that is possible but it narrows the buyer pool and affects finance.
What lease documents will a buyer want?
The current lease including any variations, any options and how they are exercised, the assignment clause, make good obligations, and any guarantees. Landlord consent is required in almost every case.
Do I need a written contract to sell a business?
Yes. A business sale is documented in a written contract prepared by a solicitor. A broker does not draft it, and you should have your own solicitor acting for you.
What if some documents do not exist?
Say so early. Buyers deal with gaps they are told about far better than gaps they discover.
Keep reading
All notes on selling a business · All seller guides · What is my business worth?
Check it yourself
Primary sources, none of them affiliated with me and none of them endorsing this site. Where anything here differs from an official source, the official source is right.
Links open on external government and industry websites. The full list sits on licensing, registers and official sources.
Ask what it is worth
Free, in writing, and nobody finds out you asked. Tell me the trade and the suburb and I will do the rest.
Nobody finds out you are selling. This goes to me only, into my own database in Sydney. I will not contact your accountant, your landlord, your bank or your staff, ever, unless you ask me to.
If you would rather not put anything in writing yet, ring 0431 124 128. Prefer to pick a time yourself? Book a time in my diary.
Thinking about selling?
Thirty minutes, on the phone or in person, at a time that suits you including evenings. You will get a straight read on where the business sits today and what would move the number. It costs nothing, there is no obligation, and nobody finds out you asked.