Paperwork Needed When Selling a Business – What Documents You’ll Need to Close the Deal


What is a Confidential Information Memorandum (CIM)?

A CIM is a marketing package for your business developed by your business broker or M&A advisor. It outlines all aspects of a business including products and services, operational details, growth opportunities, and financial performance. 

An IOI is a preliminary non-binding document through which a qualified buyer expresses genuine interest in buying a business. An IOI outlines the broad terms of the offer including the range of offer price, sources of financing, closing timeline, and transition requirements.

A letter of intent (LOI) when buying a business is a formal written document outlining an in-principal agreement between the buyer and seller of a business. The LOI should outline the buyer’s proposal to price, structure, and all other meaningful terms that will be inserted into the purchase agreement. LOI is non-binding and issued before the final purchase and sale agreement is signed.

Selling a business is a complex process requiring meticulous planning, making several strategic decisions, and confidentially marketing the deal to an array of potential buyers to solicit bids. While selling a business, among scores of tasks, one of the key things you need to get in order is to get all the paperwork and documentation done. 

How are the potential buyers going to know about the financial health of the company, operational details, or employee details? Additionally, how will all of the assets and liabilities being acquired by the new owner be legally assigned to them? Therefore, irrespective of the size of your business or the industry it operates in, several documents and reports are required to execute the sale transaction. 

In this post, we are going to talk about all the paperwork (including financial, legal, and regulatory documents) that you need to prepare before selling a business, the documents that buyers will submit to show their bids, and the documents and paperwork needed to finalize a sale and transfer all of the business assets and liabilities to the new owner. 

If you are just getting started, have a look at our comprehensive post on how to sell a business article to get a detailed view of the intricacies of selling your business. 

Here is the list of key documents you need to get ready to prepare for selling a business:

Financial Documentation

Some of the key financial documents you need to have in place before setting out to sell your business are balance sheets, profit and loss statements, and cash flow statements. 

Financial documentation provides your prospective buyers the crucial pieces of information regarding your company’s financial health and historical performance. This is also the foundation of what your M&A advisor will use to build a forward-looking financial forecast. This financial package lets prospective buyers know about your business’s financial performance.

Additionally, you’ll typically be asked to provide the records of your tax returns to demonstrate that your company complies with tax regulations. 

Audited compiled financial documents add another layer of credibility to your financial statements establishing trust, accuracy, and reliability.  However, this is uncommon for companies below $100M in revenue. In certain instances, we will encourage sellers to have their financials reviewed by professionals in a quality of earnings report before approaching the market.

While having all the financial documentation ready is crucial to getting through the sales process, you must organize these documents properly so that they can be easily shared and accessed through the data room. So, financial documents need to be up to date and transparent, and presented clearly to instill confidence in potential buyers and provide accessibility for their accountants and lawyers.

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Capital gain taxes can eat a good portion of your profits from selling a business. If you are planning to exit your business, our guide on reducing capital gains tax while selling a business can be helpful.

Legal Documents and Agreement

Legal documents give a solid legal footing to the sales transaction, which safeguards the interest of both buyer and seller. Here are some crucial legal documents involved in the process of marketing and selling a business:

  • Non-Disclosure Agreement (NDA): To ensure that prospective buyers maintain the confidentiality of all the information that is made available to them in the data room. 
  • Intellectual property (IP) documents: These include all documents related to patents and copyrights that your company owns. 
  • Non-Compete Agreements: Buyers may want sellers to enter into a non-compete agreement to prevent sellers from competing with the business post-sale.
  • Contracts and leases: All contracts and agreements with your suppliers, clients, and other stakeholders must be compiled and disclosed to potential buyers. 
  • Indication of Interest (IOI): It’s a formal non-binding letter/document through which a buyer expresses interest in buying a business. 
  • Letter of Intent (LOI): It’s a non-binding in-principal agreement between the buyer and seller of a business. 
  • Business Purchase and Sale Agreement: This is the final document outlining the terms and conditions of the sale, purchase price, assets involved, payment terms, representation, and warranties among others.  
  • Transitional service agreement (TSA): A TSA mentions the terms and conditions under which the seller agrees to provide transitional services to the buyer for a specified period post-sale. These transitional services may include IT support, operational support, advisory roles, or other functions to enable the buyer to get started with the acquired business. 


By diligently preparing and presenting legal documents, sellers can mitigate risks and facilitate a smoother transaction process, minimizing potential disputes down the line.

Corporate Records

Buyers are interested in knowing the legal and operational framework of your business. Corporate records serve as the main foundation of a business’s organizational structure and governance and it plays a vital role in the sale process. 

Corporate records such as articles of incorporation, bylaws, shareholder agreements, supplier and client contracts, and meeting minutes, provide detailed insights into the business’s ownership, management, and current arrangements with third parties.

Organizing and disclosing corporate records effectively is often a key to a successful sale. As a seller, you must ensure that all records are accurate, up-to-date, and easily accessible to interested parties.

Also, don’t fail to promptly address discrepancies or irregularities to avoid complicating the transaction process. When you maintain transparent and well-documented corporate records, you are enabling buyers to streamline the due diligence process. 

This will ensure a smoother and more efficient sale transaction. 

Licenses, Permits, and Regulatory Documents 

Potential buyers want to know whether your business has obtained the necessary approvals to operate legally. Business licenses, permits for specific activities or operations, and certifications required by regulatory bodies ensure that your business complies with various legal and regulatory norms of the state and federal government. 

Sellers must compile and provide comprehensive documentation of all relevant licenses, permits, and regulatory approvals, ensuring transparency and compliance with legal requirements. 

When you address the regulatory considerations upfront and provide thorough documentation, your business is going to look more appealing to potential buyers, which can drive its value. 

This step is especially crucial for heavily regulated industries such as establishments that make or serve alcohol or cannabis, or gambling establishments, as well as with businesses that require state licensure such as construction.

Employee-related Documentation

Employee-related documentation such as employment contracts, workforce composition, contractual obligations, non-disclosure agreements, and benefits information are crucial to ensure business continuity and smooth operations. 

Also, a roster of key personnel, their compensation, job title, and how long they have been with the organization will help educate potential buyers on the workings of the business.

Ensuring that all employment agreements are up-to-date, and show an accurate picture of the terms and conditions of employment. Additionally, you may require non-disclosure and non-compete agreements with key employees to protect sensitive information and prevent talent poaching post-sale.

Related Content

Selling a business is a nuanced process involving many moving parts – it goes much beyond preparing documents. Our ‘What is the best way to sell a small business?’ post can help you maximize proceeds after an exit.


A great deal about selling a business is about maintaining transparency and establishing trust. Buyers are going to spend a significant amount of money on buying a business. So, they would like to have an in-depth view of all areas of your business including its financial history and health, contracts, corporate & employment records, licenses, and permits. 


Ensure that you have all updated documents in place in order to enable buyers to access them easily. Moreover, cross-check the accuracy of your documents before handing over the same to potential buyers to prevent a deal-breaker from cropping up later. 


At Raincatcher, our team of M&A advisors with industry expertise helps middle-market businesses prepare and execute sales through a full-scale auction process. We help companies get the best prices and terms for their business. 

We also offer complimentary consultations for owners of qualifying businesses planning an exit. Contact us today for a consultation and explore how we can help you smoothly sail through the nitty-gritty of selling your business.