Building your data room: the documents a buyer will ask for

The short version

• Buyers ask for a long list of documents. Gathering them before you go to market saves weeks and protects the price.
• The documents go into a data room: a secure online folder you control.
• Most of what you need comes from your accountant, your attorney, your bank, your insurer and your own files.
• Start with the financial records. Legal, operations and sales records follow.
• Build the data room in stages, so what you share matches how far along each buyer is.

Why gather it now

Every document a buyer requests after signing a [letter of intent](/learn/reference#letter-of-intent "The offer document. It sets out the price, the structure and the main terms, and starts diligence.") is a small delay. Delays add up. They give a buyer time to cool off and a reason to question the price.

An owner who can answer "yes, here it is" to most requests looks organized, and organized businesses are easier to buy.

Where each document comes from

| What you need

|

Who usually has it

| | --- | --- | |

Tax returns and financial statements

|

Your accountant

| |

Monthly profit and loss statements and balance sheets

|

Your accountant or bookkeeper

| |

Bank statements

|

Your bank

| |

Loan documents and payoff amounts

|

Your lenders

| |

Payroll reports and payroll tax filings

|

Your payroll provider or accountant

| |

Formation documents and ownership records

|

Your attorney, or your state's business filing office

| |

Leases

|

Your files, or your landlord

| |

Customer, supplier and partner contracts

|

Your files

| |

Licenses and permits

|

Your files, or the agency that issued them

| |

Insurance policies and claims history

|

Your insurance agent

| |

Employee benefit plans

|

Your benefits provider

| |

Employee handbook, organization chart and written procedures

|

Your files. If they do not exist, now is the time to write them.

|

Lesson 2.6 has the full list of what goes into a data room.

An order that works

1. Financial records first. They take the longest and matter the most.
2. Legal records next. Formation documents, leases and major contracts.
3. Operations. Procedures, organization chart, equipment and insurance.
4. Sales and customers. Revenue by customer, shown as codes rather than names.

Setting it up

• Use a secure online folder that lets you share with specific people and remove access later.
• Number the folders and keep an index.
• Name each file clearly, with the year or date.
• Keep a record of who has seen what, and when.

Gaps are normal

Most owners find something missing: an unsigned contract, an expired permit, a lease that was never renewed in writing. Finding it now gives you time to fix it quietly. Finding it during due diligence gives the buyer a reason to ask for a lower price.