Resource
Data room preparation checklist
A seller-side checklist covering room structure, the financial information a buyer's diligence team will test, and the pre-diligence work that protects price once the process opens.
01
What a well-prepared data room does
A data room is not a filing exercise. It is the primary control the seller has over the pace, tone and outcome of diligence. A buyer who can find, reconcile and rely on information moves faster and reduces the price adjustments and indemnities they ask for. A buyer who cannot begins to price uncertainty.
The preparation work is done before the room opens. Every number a buyer will test should already have been tested internally, with the supporting reconciliation sitting in the room next to it.
Completeness
Missing periods, missing entities and missing schedules cost more credibility than an unfavourable number that is properly explained.
Reconcilability
Every summary schedule ties to the trial balance and to the statutory accounts, with a visible bridge for any difference.
Consistency
The same EBITDA, the same net debt and the same working capital definition appear in the information memorandum, the databook and the data room.
Control
Documented index, version control, staged release for sensitive material, and a single owner of the question and answer log.
02
Room structure and index
Structure the room the way diligence teams are staffed — financial, tax, legal, commercial, HR, IT — so each workstream can work without reading the whole room. Number folders and keep the numbering stable for the life of the process.
Folder hierarchy
Two levels wherever possible: workstream, then topic. Deeper nesting hides documents and generates avoidable questions.
File naming
Entity, document type, period, version. No dates buried inside the file only, no ambiguous 'final' suffixes.
Index document
A single spreadsheet index mapping every document to its folder, period and entity, updated as documents are added.
Access tiers
Customer names, employee-level pay data and commercially sensitive pricing sit behind a second tier released at a defined stage.
Question log
One log, one owner, dated responses, and every answer that changes a number accompanied by a document upload.
03
Financial information
This is where the process is won or lost. The financial folder should anticipate the buyer's quality of earnings work rather than react to it.
Statutory accounts
Three years of audited or filed accounts for every entity in scope, plus audit findings letters where available.
Management accounts
Monthly profit and loss, balance sheet and cash flow for at least 36 months, in a consistent format, reconciled to the statutory accounts.
Trial balances
Monthly trial balances and the general ledger extract, in a usable spreadsheet format rather than PDF.
Adjusted EBITDA bridge
The seller's own bridge from reported to adjusted EBITDA, with each adjustment supported by a document.
Revenue analysis
Revenue by customer, product, channel and geography by month, plus retention and cohort analysis where relevant.
Cost analysis
Payroll reconciliation, headcount by function by month, and a split of fixed and variable costs.
Working capital
Monthly working capital by component, ageing profiles for receivables and payables, and inventory provisioning policy.
Net debt and off balance sheet
All facilities with terms, lease schedules, deferred consideration, provisions and other debt-like items.
Budget and forecast
Current year budget, latest forecast, and prior-year budget against actual to demonstrate forecasting accuracy.
Capital expenditure
Historical capex split between maintenance and growth, plus the committed and planned pipeline.
04
Tax, legal and corporate
Tax and corporate items rarely change price but frequently delay signing. They are cheap to prepare early and expensive to chase during exclusivity.
Corporate records
Constitutional documents, share register, cap table, option agreements, group structure chart and details of past reorganisations.
Tax filings
Corporate tax returns and assessments, indirect tax returns and reconciliations, transfer pricing documentation, and any open enquiries.
Material contracts
Top customer and supplier contracts with change of control and termination provisions clearly flagged.
Property and leases
Lease agreements, rent schedules, break clauses and dilapidation exposure.
Litigation and compliance
Current and threatened litigation, regulatory correspondence, insurance policies and claims history.
Intellectual property
Registered rights, licences in and out, and confirmation of ownership of software or IP developed by contractors.
05
People, systems and operations
Buyers price transition risk. Clear documentation of who runs the business, what they are paid, and what systems they depend on reduces both the risk and the retention package that follows it.
Organisation
Organisation chart, key personnel biographies, and identification of dependency on the owner or a small number of individuals.
Employment terms
Template and executive contracts, notice periods, bonus and commission schemes, and any non-compete arrangements.
Pensions and benefits
Scheme details, contribution rates and any historical liabilities.
Systems
ERP and finance systems, key operational systems, licence terms, and known upgrade or end-of-life exposure.
Operational KPIs
The metrics management actually runs the business on, reported monthly, tying back to the financial information.
06
Pre-diligence work before opening
Before a buyer sees anything, run the diligence yourself. The purpose is to find the items that will be raised, decide how they are presented, and remove the surprises that erode negotiating position mid-process.
Vendor due diligence or a databook
Even without a full vendor report, a structured financial databook answers most first-round questions before they are asked.
Test the adjustments
Every EBITDA adjustment should survive a hostile review. Drop the ones that will not; they cost credibility on the ones that will.
Define net debt and working capital early
Publishing the seller's definitions in the databook anchors the negotiation before the buyer drafts their own.
Back-test the peg
Calculate the working capital peg on the intended definition and check what it produces at each recent month end.
Fix the reconciliations
Any unexplained difference between management accounts and statutory accounts will be found. Resolve and document it in advance.
Rehearse management
Prepare management for the sessions with the same questions the diligence team will ask, supported by the room's own documents.
Discuss an Engagement
If you require support with financial modelling, business valuation or financial due diligence for a live transaction or strategic engagement, we'd be pleased to discuss your requirements.