--- title: Due Diligence Checklist for Sellers | Stratworth Advisory url: https://www.stratworthadvisory.com/insights/due-diligence-checklist-for-sellers/ description: What buyers examine in due diligence on a UK business sale: finances, tax, legal, commercial and people. A seller's checklist and how to prepare early. last_updated: 2026-10-07 publisher: Stratworth Advisory Ltd --- Guide 09 · Due diligence # Due diligence: what a buyer will check, *and how to prepare* Due diligence is where a buyer tests everything you have told them. It is also a stage where problems can slow a sale down, reopen discussions about price or terms, or in some cases stop a deal altogether. Much of what decides how it goes is settled before it starts. This guide sets out what buyers usually examine, a checklist you can work through now, and how to prepare. - By [**Nik Spencer**](https://www.stratworthadvisory.com/about-nik/) - Published 7 October 2026 - 8 min read - 8 sources ## Key takeaways 1. Due diligence is the buyer’s detailed examination of the business before they commit. ICAEW describes financial, tax, vendor, commercial and operational due diligence. 2. ICAEW’s Corporate Finance Faculty says financial due diligence supports sellers as well as buyers and providers of finance, by improving what they know about how the business has performed. 3. Most findings are things the seller could have found and fixed first: records, contracts, ownership, and dependence on the founder or on a few customers. 4. Build a document index and a data room before a buyer asks, and keep it current. 5. Some sellers commission vendor due diligence, so that problems are found on their own timetable. ## What due diligence is, and why it matters Once a buyer has agreed terms in principle, usually in heads of terms, they will want to check that the business is what they think it is. That examination is due diligence. It covers the numbers, the tax position, the legal and commercial foundations and the people, and it is carried out by the buyer and their advisers, and by anyone funding the deal. ICAEW’s Corporate Finance Faculty describes the purpose of [financial due diligence](https://www.icaew.com/technical/corporate-finance/guidelines/financial-due-diligence-guideline-71) in its guideline: it is key to enabling informed decisions about proposed investments or divestments, and it supports sellers, buyers and providers of finance by improving what they know about how the business has performed financially. In a sale, it can help identify red flags and risks, test the deal, and support the valuation of the business being acquired. For a seller, that last point matters most. What a buyer finds can change the price, the structure, or the protections they ask for in the sale agreement. The best defence is to look first. Many of the problems uncovered in due diligence aren’t new. They were already in the business; the process simply brings them into view. ## The strands of due diligence ICAEW describes the work of [transaction services](https://www.icaew.com/technical/corporate-finance/transaction-services) as carrying out financial, tax, vendor, commercial and operational due diligence. On a typical sale of a private company, expect the buyer’s advisers to look at: - **Financial**: historical results, how sustainable the earnings are, cash flow, working capital, debt and forecasts. - **Tax**: the company’s tax compliance, any open matters with HMRC, and anything that could become a liability after the sale. - **Legal**: ownership of the shares, the company’s records, key contracts, intellectual property, property, disputes and regulatory matters. - **Commercial**: the market, the competitive position, the customers and the credibility of the business plan. ICAEW’s guideline on [commercial due diligence](https://www.icaew.com/technical/corporate-finance/guidelines/commercial-due-diligence) notes that it is typically undertaken for transactions including acquisitions, mergers, capital raises and management buyouts. - **People**: employment contracts, key staff, pensions and any disputes. - **Operational**: systems, suppliers, technology and how the business actually runs. The depth varies with the buyer, the size of the deal and how it is funded. A buyer using borrowed money or outside investors will usually go further, because their funders will want assurance too. The British Business Bank’s guide to [selling your business](https://www.british-business-bank.co.uk/business-guidance/guidance-articles/business-essentials/selling-your-business) quotes two M&A practitioners who describe due diligence on a trade sale as typically less onerous than in a private equity transaction. ## A seller’s checklist The checklist follows the order most buyers work in. Tick what you could hand over today, complete and current. Anything you cannot tick is a preparation priority. Exhibit 1What a buyer will ask to see Finance The numbers - **Statutory accounts** For the last few years, filed, and consistent with your management accounts. - **Monthly management accounts** On time, reconciled to the bank, with any adjustments explained and evidenced. - **A forecast you can defend** Built on the same assumptions you use to run the business. - **Debt and finance agreements** Loans, overdrafts, leases and any security you have given personally, listed in one place. Tax Tax and compliance - **Tax returns and correspondence** Corporation tax, VAT and payroll, with correspondence with HMRC filed. - **Open matters** Anything outstanding with HMRC, and where it stands. Legal The company and its contracts - **Company records** Statutory registers, the PSC register and Companies House filings up to date. - **Key contracts** Customer, supplier and lease agreements, signed, current and easy to find, including any terms that apply if the company changes hands. - **Intellectual property** Evidence that the company, not a founder, an agency or a contractor, owns the names, designs, software and content it relies on. - **Disputes and claims** Anything current or threatened, with the correspondence. People Your team - **Employment contracts** Written terms that reflect how people actually work. - **Key people** Who the business relies on, and how they are retained. - **Policies and pensions** HR policies, pension arrangements and any open issues. Commercial Customers and suppliers - **Customer analysis** Revenue by customer over several years, and your largest customers’ share. - **Supplier dependencies** Critical suppliers, and the terms you hold them on. Operations How the business runs - **Processes and systems** How the work gets done, written down, and the software the business relies on, licensed to the company. - **Data protection** What personal data you hold, and how you protect it. A general list: your advisers will tailor it to your business and your buyer. Your ticks are saved in this browser only. Nothing is sent to us. ## What buyers most often find Most issues that surface in due diligence are not dramatic. They are gaps that could have been closed months earlier: - **Numbers that do not reconcile** between the management accounts, the statutory accounts and the bank. - **Adjustments that cannot be evidenced**, when profit is normalised for one-off costs or for how the owners are paid. - **Contracts that are missing, unsigned or out of date**, or that let an important customer walk away if the company changes hands. - **Intellectual property owned by the wrong person**, such as a founder, an agency or a contractor. GOV.UK’s overview of [intellectual property](https://www.gov.uk/intellectual-property-an-overview) explains how ownership arises. - **Dependence on the founder or on a few customers.** The British Business Bank lists a business that relies on its owner or on a single customer among the reasons an exit may not be viable. - **Company records not kept up to date**, including the register of [people with significant control](https://www.gov.uk/guidance/people-with-significant-control-pscs). Each one gives a buyer a reason to slow down, to ask for extra protection in the sale agreement, or to revisit the price. Our guides on [owner dependency](https://www.stratworthadvisory.com/insights/reduce-owner-dependency/) and [customer concentration risk](https://www.stratworthadvisory.com/insights/customer-concentration-risk/) cover the two biggest in depth. ## Build a data room before you need one A data room is the organised set of documents a buyer’s advisers work through, usually in a secure online folder. Building it early does three things: it shows you the gaps while there is time to fix them, it shortens the transaction, and it tells a buyer that the business is well run. Start with a simple document index: 1. List every document a buyer is likely to ask for, under the headings in the checklist above. 2. Note where each one is, who is responsible for it, and whether it is complete and current. 3. Fix the gaps, starting with those that affect value: the numbers, the contracts and ownership. 4. Keep it current. An index that is a year out of date is a project, not a resource. GOV.UK’s guide to [company and accounting records](https://www.gov.uk/running-a-limited-company/company-and-accounting-records) sets out the records a limited company must keep, which are the foundation of any data room. Nik's view The time to discover a weakness in your business is when you still have time to fix it, not when a buyer has found it for you. ## Vendor due diligence Some sellers go a step further and commission due diligence on their own business before going to market. Known as vendor due diligence, it is carried out by advisers acting for the seller, and the findings can be shared with buyers. ICAEW’s financial due diligence guideline covers the different forms of due diligence, including vendor assistance. It costs time and money before any buyer is committed, so it is not right for every sale. But it lets you find problems on your own timetable, and it can make a buyer’s own work faster. Ask your accountant whether it suits your circumstances. ## During due diligence: keeping it moving - **Answer quickly and completely.** Every unanswered question costs time, and invites more. - **Keep the business performing.** A dip in trading during the process gives a buyer reason to pause or to renegotiate. Someone other than you needs to run the business day to day. - **Keep it confidential.** Use confidentiality agreements, and keep a short list of who knows. - **Disclose properly.** Your solicitor will explain how known issues are disclosed against the warranties in the sale agreement. Problems disclosed early are far easier to deal with than problems found late. - **Handle employee matters carefully.** Where TUPE applies there are duties to inform and consult. GOV.UK’s guide to [business transfers, takeovers and TUPE](https://www.gov.uk/transfers-takeovers) explains the basics. Take legal and tax advice Due diligence leads straight into the sale agreement, its warranties and the buyer’s protections. This guide is general information: your solicitor and your accountant should advise on your own position. ## How Stratworth helps you prepare In SCALE2SELL® this is the Exit Readiness pillar: preparing for due diligence long before a buyer arrives, with records, contracts and risks in order. The other pillars build the evidence due diligence tests, from the numbers in [Financial Clarity & Drivers](https://www.stratworthadvisory.com/scale2sell/financial-clarity/) to the processes in [Operational Efficiency & Systems](https://www.stratworthadvisory.com/scale2sell/operational-efficiency/). Exit Programme clients also have a quarterly review of their management accounts and data-room readiness. We prepare and guide; your accountant, solicitor and tax adviser carry out and advise on the transaction work. To see where your business stands, [score it with the free Readiness Assessment](https://www.stratworthadvisory.com/readiness-assessment/), or [book a complimentary Founder Conversation with Nik](https://www.stratworthadvisory.com/contact/). [Related SCALE2SELL® pillar 08 of 08**Exit Readiness**The preparation and structure for a future sale, exit or succession.Exit Readiness in detail](https://www.stratworthadvisory.com/scale2sell/exit-readiness/) ## Sources 1. [ICAEW Corporate Finance Faculty: Financial due diligence guideline](https://www.icaew.com/technical/corporate-finance/guidelines/financial-due-diligence-guideline-71)icaew.com 2. [ICAEW: Transaction services (due diligence)](https://www.icaew.com/technical/corporate-finance/transaction-services)icaew.com 3. [ICAEW Corporate Finance Faculty: Commercial due diligence](https://www.icaew.com/technical/corporate-finance/guidelines/commercial-due-diligence)icaew.com 4. [British Business Bank: Selling your business](https://www.british-business-bank.co.uk/business-guidance/guidance-articles/business-essentials/selling-your-business)british-business-bank.co.uk 5. [GOV.UK: Intellectual property and your work](https://www.gov.uk/intellectual-property-an-overview)gov.uk 6. [GOV.UK: People with significant control (PSCs)](https://www.gov.uk/guidance/people-with-significant-control-pscs)gov.uk 7. [GOV.UK: Company and accounting records](https://www.gov.uk/running-a-limited-company/company-and-accounting-records)gov.uk 8. [GOV.UK: Business transfers, takeovers and TUPE](https://www.gov.uk/transfers-takeovers)gov.uk All sources checked in October 2026. We cite only authoritative UK sources, and leave out any figure we cannot source. **About this guide.** Written by Nik Spencer, founder of Stratworth Advisory (34 years of founder experience, 3 successful business exits). Published 7 October 2026; last updated 7 October 2026. It is general information for UK business owners, not advice on your circumstances. Stratworth Advisory provides strategic business guidance only and does not offer regulated financial, legal or investment advice. Clients should seek independent professional advice where appropriate. Next step ## Find out what a buyer *would find.* The free SCALE2SELL® Readiness Assessment shows which pillars would hold a buyer up in due diligence. Then talk it through with Nik on a complimentary Founder Conversation. [Take the free Readiness Assessment](https://www.stratworthadvisory.com/readiness-assessment/) [Book a complimentary Founder Conversation with Nik](https://www.stratworthadvisory.com/contact/) Complimentary and confidential. Keep reading ## More guides *for founders* [All guides](https://www.stratworthadvisory.com/insights/) Guide 06 · 9 min read ### [How long does it take to sell a business?](https://www.stratworthadvisory.com/insights/how-long-does-it-take-to-sell-a-business/) Guide 01 · 12 min read ### [How to prepare a business for sale: a guide for founders](https://www.stratworthadvisory.com/insights/how-to-prepare-a-business-for-sale/) Guide 03 · 9 min read ### [How to make your business less dependent on you](https://www.stratworthadvisory.com/insights/reduce-owner-dependency/) ### Related SCALE2SELL® pillars 1. [08 Exit Readiness](https://www.stratworthadvisory.com/scale2sell/exit-readiness/) 2. [03 Financial Clarity & Drivers](https://www.stratworthadvisory.com/scale2sell/financial-clarity/) 3. [04 Operational Efficiency & Systems](https://www.stratworthadvisory.com/scale2sell/operational-efficiency/) Related service[Exit planning](https://www.stratworthadvisory.com/exit-planning/) --- Stratworth Advisory Ltd. Registered in England and Wales, company number 16078743. Registered office: Avon View Offices, 90 High Street, Bidford-on-Avon, Alcester, England, B50 4AF. ICO registration number ZB932222. Stratworth Advisory provides strategic business guidance only and does not offer regulated financial, legal or investment advice. Clients should seek independent professional advice where appropriate. Contact: nik@stratworthadvisory.com. Book a complimentary Founder Conversation: https://www.stratworthadvisory.com/contact/