Due diligence pack: what a seller should prepare before buyers start asking

A due diligence pack is the set of documents and answers a seller prepares so a buyer, investor or lender can verify the business quickly. It is the mirror image of the buyer's due diligence checklist: the buyer asks, the pack answers. Sellers who prepare one before a process starts control the pace of the deal; sellers who assemble it in response to requests usually find the problems at the same moment the buyer does, which is the most expensive time to find them.

What a due diligence pack should contain

• Corporate: incorporation documents, share register, organisational chart, board minutes and any shareholder agreements.
• Financial: several years of accounts, recent management accounts, forecasts, debt and security documents.
• Commercial: key customer and supplier contracts, with change-of-control and termination clauses flagged.
• People: employee list with roles and terms, key contracts, pension arrangements, any disputes.
• Legal and compliance: licences, permits, litigation, regulatory correspondence, data protection records.
• Assets and IP: property leases, equipment, intellectual property registrations and assignments from contractors.
• Tax: filings, open enquiries and any rulings or agreements with tax authorities.

Structure the pack like the buyer's request list

1. Use a numbered index that mirrors a typical due diligence checklist, so each buyer request maps to a folder.
2. Put one document per item, named consistently, with its date — not a bundle of scans in one file.
3. Mark each index line as provided, not applicable, or to follow, with an owner and a date.
4. Write short covering notes where a document needs context — a settled dispute, an expired licence being renewed.
5. Keep a log of every question asked and every answer given, dated, so answers stay consistent across buyers.
6. Control versions: when a document is updated, record what changed and when.

Run your own review before a buyer does. A seller-side pass through the pack finds missing IP assignments, unsigned contracts and change-of-control clauses while there is still time to fix them rather than negotiate around them.

Tracking requests and answers

The index is a register, not a folder tree. Ettex Records holds one row per item with status, owner, document and date, and a separate question log where each buyer question is recorded with its answer. That structure is what keeps a busy process consistent: the same question gets the same answer, and nothing requested sits unanswered because it was lost in an email thread. Where confidentiality agreements and consents need signing before access is granted, the executed copies belong on the same record.

Where a virtual data room fits

For a large transaction with many bidders, a dedicated virtual data room adds page-level access logs, watermarking and granular permissions per bidder. Ettex is not a virtual data room product. For smaller deals, investment rounds and lender reviews, an organised pack with a clear index and a question log delivers most of the benefit — and the preparation work is identical either way, because the tool does not organise the documents for you.

Assembling the material is one job; controlling who reads which part of it is another. Virtual data rooms for due diligence add per-party permissions, staged release and a page-level access log, which matters once more than one bidder is looking.

One category of customer needs more than a complete file. PEP screening looks for prominent public functions held by the customer, their family or close associates, and has to be repeated because status changes with appointments.

Common gaps that cost sellers

• Customer contracts that cannot be found, or were never signed.
• Intellectual property created by contractors without written assignment.
• Management accounts that do not reconcile to filed accounts.
• Undisclosed disputes that surface through a buyer's own searches.
• Employee terms that differ from what the handbook says.