Diligence rarely kills a deal because of a bad number. It kills deals because answers arrive slowly, inconsistently, or contradict something already provided. A prepared pack removes most of that risk before the process starts.
Financial information
- Three years of statutory accounts, plus management accounts for the current year to date
- A monthly P&L, balance sheet and cash flow for at least 24 months, in one consistent format
- A trial balance for each period end, reconciling to the accounts
- A bridge from management accounts to statutory accounts, with every adjustment explained
Quality of earnings support
- A schedule of one-off, non-recurring and owner-discretionary items, each with evidence
- Revenue by customer, product and month, so concentration and seasonality are visible
- Gross margin by product line, with the cost allocation basis stated
- Any related-party transactions, in full, with terms
Working capital and debt
- Aged debtors and creditors at each period end
- A normalised working capital calculation across at least 12 months
- A full debt schedule: facility, balance, rate, maturity, covenants and headroom
- Off-balance-sheet commitments, leases and guarantees
Forecast material
- The current integrated model, with assumptions documented and sourced
- Actual vs budget performance for prior years, which is how a buyer tests whether your forecasts have historically been reliable
- Downside case with the specific triggers that would cause it
Tax, payroll and compliance
Filings and payment history, payroll reconciliations, VAT or sales-tax returns tied to the ledger, and confirmation of any open enquiries.
The single strongest signal in diligence is not a good number. It is that every number you provide reconciles to every other number you provided.
How to prepare
Build the pack before you go to market, then have someone independent test it by asking the questions a buyer will ask. Most gaps surface in the first hour. Fixing them then costs a fraction of what it costs mid-process, with a counterparty watching the clock.