What buyers request in M&A due diligence
8 workstreams, about 120 documents for a lower middle market deal
Buyers ask for the documents that prove three things: the earnings are real, the company owns what it says it owns, and nothing in its contracts, workforce or court record will cost money after closing. The request list usually arrives within days of the signed letter of intent (LOI), with 80 to 150 items and the first delivery expected within 1 to 2 weeks. See the full due diligence request list for every item with its lookback period and priority.
Financial
24 items3-5 years of financial statements, 24-36 months of monthly accounts, EBITDA bridge, AR and AP aging, debt schedule
Tax
12 itemsFederal and state returns, sales and payroll tax filings, tax notices and audits
Legal and corporate
16 itemsFormation documents, bylaws, minutes, fully diluted cap table, shareholder agreements
Contracts and commercial
18 itemsTop customer and supplier contracts, change-of-control clauses, customer concentration, churn
HR and employment
14 itemsEmployee census, key agreements, contractor classification, benefit and bonus plans
IP and technology
14 itemsPatents and trademarks, invention assignments, licenses, cybersecurity policies and incidents
Operations and regulatory
8 itemsLicenses and permits, supply chain, certifications, regulatory correspondence
Insurance, litigation and real estate
14 itemsInsurance policies and claims, litigation summary, leases, deeds, environmental reports
Pre-LOI vs post-LOI documents
Before the LOI: summaries
- Summary financials and adjusted EBITDA
- Customer concentration without names
- Data room index and business overview
- Shared view-only behind an NDA, watermarked
After the LOI: source documents
- Full financials, general ledger and tax returns
- Cap table, minutes and material contracts
- Named customer data and payroll, to the clean team only
- Tracked against the buyer's request list
Run the buyer's list inside your data room with the Papermark request list: every item gets a status, a due date and an assignee, on the Data Rooms plan from $99/month.
Document organization best practices
Secure, efficient, and professional document management for due diligence
- Secure Storage
- Use encrypted virtual data rooms with access controls and audit trails.
- Easy Access
- Organize documents logically with clear naming conventions and indexing.
- Version Control
- Maintain current versions and track all document updates and changes.
Document categories
Comprehensive list of documents typically required for due diligence
Corporate & Legal Documents
Essential corporate formation and legal compliance documents
Legal document establishing the company
Internal rules governing company operations
Records of board decisions and authorizations
Complete ownership and equity structure
Agreements between company and shareholders
Employee equity compensation plans
Financial Documents
Comprehensive financial records and projections
Professional audit of financial position (if available)
Regular P&L, balance sheet, cash flow statements
Complete tax filings and compliance records
3-5 year forward-looking financial models
Performance against planned budgets
Detailed cash flow patterns and projections
Operational Documents
Day-to-day business operations and performance metrics
Comprehensive business strategy and execution plan
Company structure and reporting relationships
Background and experience of leadership team
Major customer agreements and terms
Key supplier and service provider contracts
Business insurance coverage and claims history
Intellectual Property
Patents, trademarks, copyrights, and trade secrets
All patents filed, pending, and granted
Brand names, logos, and trademark protections
Original works and creative content ownership
Employee and contractor IP assignment docs
Third-party IP licenses and usage rights
Protection of confidential business information
HR & Employment
Human resources policies and employee documentation
Company policies and employee guidelines
Key employee contracts and terms
Salary, bonus, and benefits structures
Employee evaluation and development records
Employee skill development and certifications
Workplace safety policies and incident reports
Technology & Security
IT infrastructure, security measures, and technical documentation
Technical infrastructure and system design
Data protection and cybersecurity measures
GDPR, CCPA, and other privacy regulations
Third-party software usage and licensing
Business continuity and data recovery procedures
Security assessments and compliance audits
Setting up your secure due diligence data room
Four essential steps to organize your due diligence materials
Create Folder Structure
Organize documents into logical categories matching buyer and investor expectations. Use consistent naming conventions.
Set Access Permissions
Control who can view, download, or share each document. Use granular permissions for sensitive materials.
Add Document Index
Create a master index explaining each document and its relevance to the due diligence process.
Enable Tracking
Monitor document access, time spent, and engagement to understand which buyers or investors are reading, and track open items on a request list.
Due diligence documents preparation timeline
For an M&A sale or a fundraise
6-12 Months Before a Sale (3-6 Before a Fundraise)
Begin organizing all corporate and financial documents, and fix what a buyer would find: an unreconciled cap table, missing IP assignments, books that do not match the tax returns.
- Set up document management system
- Gather all corporate formation documents
- Organize financial records and statements
- Document intellectual property portfolio
1-3 Months Before Launch
Refine documents and address any gaps or issues.
- Update all documents to current state
- Resolve any legal or compliance issues
- Prepare financial projections and models
- Flag contracts with change-of-control clauses
During Due Diligence
Maintain the data room and answer buyer or investor requests promptly, typically over 30 to 90 days after the LOI.
- Set up secure virtual data room
- Load the request list and track each item
- Monitor document engagement and feedback
- Update documents as business evolves