Guides for owners · 7 min read

What buyers look for: the documents to prepare for due diligence

By Colton Doan, founder of Sellvara · Updated October 30, 2026

Once you accept a letter of intent, the buyer starts due diligence: a detailed check of everything you've told them about the business. It usually lasts 30 to 90 days, and it's where many deals slow down, lose value or fall apart. Almost always, the reason is the same: documents that are missing, messy or don't match what the buyer was told.

The good news is that you can prepare for nearly all of it in advance. This checklist covers what buyers of a typical Canadian small or medium business ask for, grouped by topic.

How due diligence works

The buyer, usually with their accountant, lawyer and sometimes their lender, sends you a request list. You share the documents, usually in a secure online folder called a data room, and answer follow-up questions. They're checking three things:

• Are the numbers real? Do the financial statements, tax returns and bank statements agree?
• Is anything hidden? Lawsuits, unpaid taxes, environmental problems, unhappy key customers.
• Will the business keep working after the sale? Can contracts, leases, licences and key people transfer to the new owner?

Financial documents

• Financial statements for the last three to five years, and year-to-date results.
• Corporate or personal tax returns (T2, or T1 with business statements) for the same years, with notices of assessment.
• GST/HST, payroll (source deductions) and any provincial sales tax filings, with proof they're up to date.
• Bank statements, to confirm revenue.
• A list of your add-backs, with records supporting each one.
• Accounts receivable and accounts payable lists, with ages.
• Monthly sales for the last two or three years, to show seasonality and trends.
• Details of any debts, loans, lines of credit and leases on equipment.
• Your budget or forecast, if you have one.

Customers and sales

• A list of your top customers and the share of revenue each represents (buyers usually see names later, once the deal is firm).
• Customer contracts, especially long-term or high-value ones.
• Pricing, discounts and any special arrangements.
• Information on customer turnover: how many you keep from year to year.

Suppliers and operations

• Key supplier agreements, and any exclusive or minimum-purchase terms.
• A list of equipment, vehicles and other major assets, with age and condition.
• Maintenance records.
• An inventory list and how it's valued.
• Written processes or manuals showing how the business runs.

Property and lease

• Your lease, including any renewal options and whether it can be assigned to a buyer.
• Correspondence with your landlord about the sale, if any.
• If you own the property: the deed, property tax bills, and any appraisals.
• Any environmental reports, especially for industrial or automotive businesses.

Employees

• An employee list with roles, start dates, pay and benefits (often anonymized until late in the process).
• Employment contracts, especially for key staff and managers.
• Your benefit plan details.
• Any union or collective agreement.
• Any past or current employment disputes, workplace safety claims or investigations.
• Your WSIB or provincial workers' compensation account status.

Legal and corporate records

• Articles of incorporation and the corporate minute book.
• The share register, showing who owns what.
• Any shareholders' agreement.
• Business licences, permits and registrations, and whether they can transfer.
• Trademarks, domain names and other intellectual property, and who owns them.
• Any current, threatened or past lawsuits.
• Insurance policies and claims history.

Digital assets

• Ownership of your website, domain, social media accounts and online listings.
• Software licences and subscriptions the business depends on.
• How customer data is stored, and how you meet privacy rules.

Tips for a smoother due diligence

• Prepare before you list. Gather these documents while you're getting the business ready. Our 12-month checklist shows when to do what.
• Disclose problems early. Every business has issues. A problem you raise upfront is a negotiating point. The same problem discovered by the buyer is a trust problem, and can end the deal.
• Make sure the numbers tie. Your financial statements, tax returns and the figures in your listing should all agree. If they don't, have your accountant explain why.
• Share in stages. Sensitive details such as customer names and staff salaries can wait until the buyer is close to committing. See how to sell your business confidentially.
• Keep running the business. Due diligence is time-consuming, but results that slip during the process often lead to a lower price.

Common questions

How long does due diligence take when selling a business?

Usually 30 to 90 days, depending on the size of the business, how well prepared the seller is, and the buyer's financing.

What documents do buyers ask for in due diligence?

Financial statements and tax returns for three to five years, sales tax and payroll filings, customer and supplier contracts, the lease, employee information, corporate records, permits and details of any legal issues.

Should I tell buyers about problems with my business?

Yes, early. A problem you disclose becomes a negotiating point. The same problem discovered by the buyer damages trust and can end the deal.

Next steps

For the full picture of where due diligence fits, read how to sell a small business in Canada. If you're still working out the price, start with what your business is worth.

This guide is general information, not legal, tax or financial advice. Every sale is different: talk to your own accountant and lawyer before you decide.