The Pre-LOI Seller Checklist: 25 Things to Prepare Before Going to Market
Going to market unprepared costs you time, money, and leverage. Use this comprehensive checklist to get organized before engaging with buyers—and maximize your exit value.
Checklist Overview
The period before you receive a Letter of Intent (LOI) is critical. Buyers are evaluating you, and every question you can't answer or document you can't produce erodes confidence and gives them leverage to negotiate down.
This checklist covers the 25 most important items to prepare across five categories. Start working through these items 6-12 months before going to market. The more prepared you are, the stronger your negotiating position and the higher your likelihood of closing at your desired valuation.
Financial Preparation
6 critical items to prepare
Clean, reconciled financials for the past 3 years
Monthly P&L, balance sheets, and cash flow statements with all accounts reconciled.
Why This Matters
Buyers need to see clear trends and verify your reported performance. Discrepancies raise red flags.
Documented EBITDA adjustments and add-backs
Create a detailed schedule of all normalization adjustments with supporting documentation.
Why This Matters
Unsupported add-backs will be rejected during QoE. Every dollar claimed must be proven.
Tax returns (business and personal) for 3 years
Federal and state tax returns, including all schedules and K-1s if applicable.
Why This Matters
Buyers verify that reported financials align with tax filings. Discrepancies cause delays.
Working capital analysis and normalization
Calculate normalized working capital requirements based on 12-month averages.
Why This Matters
Working capital is typically part of the deal structure. Know your number before negotiating.
Current accounts receivable and payable aging
Detailed AR/AP aging reports with notes on any significant or aged items.
Why This Matters
Buyers assess collectability and payment terms to understand true cash conversion.
Capital expenditure history and requirements
Document CapEx for past 3 years and identify deferred maintenance or upcoming needs.
Why This Matters
Deferred CapEx can result in purchase price adjustments or escrows.
Legal & Compliance
6 critical items to prepare
Corporate structure and ownership documentation
Articles of incorporation, operating agreements, cap table, and ownership certificates.
Why This Matters
Buyers need clear title to what they're purchasing. Messy cap tables delay closing.
Material contracts and agreements
Customer contracts, vendor agreements, leases, and any contracts over $25K annually.
Why This Matters
Buyers assess contract terms, renewal rates, and change-of-control provisions.
Intellectual property inventory and documentation
Patents, trademarks, copyrights, domain registrations, and assignment agreements.
Why This Matters
IP ownership disputes can kill deals. Ensure all IP is properly assigned to the company.
Insurance policies (current and claims history)
General liability, D&O, cyber, and professional liability with 5-year claims history.
Why This Matters
Claims history impacts post-close insurance costs and can reveal hidden liabilities.
Litigation history and outstanding legal matters
List all past and current litigation, disputes, demand letters, or regulatory inquiries.
Why This Matters
Undisclosed litigation is a deal killer. Disclose everything, even if settled.
Regulatory compliance and licenses
Industry licenses, permits, certifications, and compliance documentation.
Why This Matters
Non-compliance or license transferability issues can derail transactions.
Operational Documentation
5 critical items to prepare
Customer list with revenue concentration analysis
Complete customer list showing revenue by customer, retention rates, and contract terms.
Why This Matters
Customer concentration above 20% is a major risk factor that impacts valuation.
Vendor list and key supplier relationships
List of all vendors over $25K annually, including terms and relationship strength.
Why This Matters
Buyers assess supply chain risk and identify key vendor relationships.
Standard Operating Procedures (SOPs)
Document core processes, workflows, and systems that run the business.
Why This Matters
Businesses that run without the owner command higher valuations.
Technology stack and systems documentation
List all software, licenses, integrations, and technical dependencies.
Why This Matters
Buyers evaluate tech debt, subscription costs, and integration complexity.
Sales and marketing process documentation
Lead generation, conversion processes, marketing channels, and performance metrics.
Why This Matters
Predictable, documented sales processes demonstrate sustainability.
Team & HR
4 critical items to prepare
Organization chart and employee census
Complete org chart with names, titles, tenure, compensation, and reporting structure.
Why This Matters
Buyers assess key person risk and identify retention needs.
Key employee contracts and retention agreements
Employment agreements, non-competes, incentive plans for critical team members.
Why This Matters
Loss of key employees post-close can trigger earnout or purchase price adjustments.
Compensation and benefits summary
Base, bonus, benefits, equity for all employees including founders.
Why This Matters
Buyers model post-close labor costs and identify below-market compensation.
HR policies and employee handbook
Written policies on PTO, remote work, termination, harassment, and other HR matters.
Why This Matters
Lack of documented HR policies creates liability risk for buyers.
Strategic Positioning
4 critical items to prepare
Growth strategy and market opportunity
Document your growth plans, TAM/SAM analysis, and market positioning.
Why This Matters
Buyers pay premiums for businesses with clear growth opportunities.
Competitive analysis and differentiation
Identify competitors and articulate your unique value proposition.
Why This Matters
Buyers need to understand what makes you defensible in the market.
Customer acquisition metrics and unit economics
CAC, LTV, payback period, and cohort analysis if applicable.
Why This Matters
Strong unit economics demonstrate scalability and sustainability.
Product roadmap and development pipeline
Planned features, releases, and product evolution strategy.
Why This Matters
Buyers assess product-market fit and innovation pipeline.
Getting Started
Don't try to do this alone. Work with experienced M&A advisors who can guide you through the preparation process and help you identify gaps before buyers do.
Start early. Many of these items take months to prepare properly. Beginning 12-18 months before going to market gives you time to address issues without rushing.
Be honest about gaps. If you can't check every box, that's okay. Knowing your weaknesses allows you to prepare responses and manage buyer expectations proactively.
Dan Doran, CVA
Founder, Quantive
Dan is a Certified Valuation Analyst and M&A advisor who has helped hundreds of founders prepare for successful exits. He created this checklist based on 20 years of experience guiding sellers through the M&A process.
Get Expert HelpGet More M&A Preparation Resources
Join 2,500+ founders who get our monthly insights on preparing for successful exits, maximizing value, and navigating the M&A process.