Insights

The Due Diligence Checklist: Every Document a Canadian Business Buyer Will Ask For

The complete due-diligence document checklist for selling a Canadian business, what buyers request, in what order, and how to answer in days instead of months.

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Due diligence is where deals die. Not on price, that was agreed in the offer, but on proof. For 60 to 90 days, the buyer's accountants and lawyers open everything, and every document you can't produce quickly becomes doubt, and doubt becomes discount. Here is the checklist, in roughly the order requests arrive.

A. Corporate records

Articles of incorporation and amendments · minute book, current · shareholder agreements · share register · any options, warrants or side agreements. Test: findable in one day, current versions, signed.

B. Financial statements & books

3 years of statements (review or compilation) · monthly bank reconciliations, current within 15 days · trial balance tying to statements · revenue by customer, by year · margin by product/job · AR and AP aging · inventory records if applicable · management reports that tie to the ledger. This is where the seven files that tell the truth live, full walkthrough here.

C. Tax

Corporate returns, 3 years, with assessments · GST/PST filings and proof of payment · payroll remittance statements (source deductions are personal-liability territory, buyers check hard) · any audit correspondence. Pass/fail: nothing frightens a buyer faster than an undisclosed tax balance.

D. Revenue & customers

Contracts behind your top accounts · concentration analysis (what % is your largest customer?) · pipeline and recurring-revenue evidence · churn/retention history. A written contract behind each key relationship is worth real money at the table.

E. People

Employment agreements for every person · payroll register · vacation liabilities, quantified · benefit plans · contractor agreements (misclassification is a favourite diligence finding) · org chart with actual decision rights.

F. Operations & assets

Leases (current, assignable, an expired lease on a critical location has stalled many sales) · equipment lists with ownership/financing · permits and licenses · insurance policies and claims history · key supplier agreements · documented SOPs for core processes.

G. Legal & risk

Litigation history and anything pending · warranty/complaint records · environmental reports where relevant · IP registrations · data/privacy practices.

H. Systems & the quiet file

What software runs the business, who owns the accounts and data, what's documented · and the owner's calendar, because if the week is approvals and firefighting, the buyer prices a job, not a company. Owner dependence is the discount nobody itemizes.

The speed test

Grade yourself: could you produce every item above within five business days? Sellers who can, close cleaner and closer to asking. Sellers who can't give the buyer weeks of leverage. Building the data room before you have a buyer is the single highest-return preparation move, and it's a core deliverable of our Exit-Readiness engagements. Start with the free Exit Readiness Score to see which sections would hurt today. (We prepare the answers; your CPA, lawyer and broker run the deal, we don't do tax, legal or valuations.)

Frequently asked questions

What is due diligence? The 60–90-day verification period after an offer, where most failed deals die, on proof not price.

What do buyers request? Corporate records, reconciled financials, customer contracts, tax proof, payroll, leases, permits, insurance, litigation history.

How fast should I respond? Days. Slow answers read as concealment and cost leverage.

Build the data room early? Yes, it collapses response time and surfaces fixable problems before a buyer sees them.