Set Up a Data Room to Sell Your Business

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Katie Fleming

Co-founder and COO of Owner Actions

A business owner sets up a data room

When selling your business, potential buyers will want to view some of your core business documents. Financial, procedure, and personnel documents are just a few your buyers might request. To keep these documents organized, you’ll need to set up a file storage system—sometimes called a “data room”—your buyers can easily access.

In this article, you’ll learn how to set up a data room that will give a great impression to buyers.


What does “data room” mean?

Data room is a reference to an old approach to storing business data. Years ago, M&A advisors who helped sell a business would store that company’s information in a dedicated room in their office. Prospective buyers could visit that room and pour through the details of a business to make an informed buying decision.

Today’s records are digitized, canceling out the need for a physical space for buyers to use. Sellers now create Dropbox or other digital folders with important records that are relevant to the future buyers of their businesses.


What should my data room include?

Your virtual data room should include documents that help buyers understand these 11 key areas of your business:

  1. Product and service lines
  2. Operations
  3. Client base
  4. Financial strength
  5. Cash flows
  6. Growth potential
  7. Legal concerns
  8. Vendor and supplier relationships
  9. Key employees
  10. The site
  11. The strength of its competitions


Here’s what you could include for each of these categories:


Product and service lines

Include product lists, lists of service offerings, or product catalogs that show what you sell. If pricing is not included in these documents, you should also provide complete price lists.



Provide procedural documents, such as handbooks, procedural manuals, diagrams of workflows, and other materials that help prospective owners understand how your business operates. You might also provide copies of any safety and industry certifications, safety records, licenses, and copies of patents or trademarks if they’re relevant to your business.


Client base

Offer customer lists to show the number of people or businesses you serve. Most owners will want to see a few years’ worth of customer records to understand growth patterns and churn rates. You should also provide copies of the customer contracts you hold, especially those that are essential to the long-term health of your business.


Financial strength

Perhaps most essential, be sure to include your company’s financial statements, including several years of income statements and balance sheets. You should also include a list of tangible assets and records on your accounts receivable.


Cash flows

Offer a cash flow statement. This will help prospective buyers see that the business has enough cash on hand to cover its expenses, tax obligations, and investments into necessary growth.


Growth potential

Provide the business plan you follow to capture a greater share of your market. If you can document the success of your past pushes for growth, be sure to include them in this folder.


Legal concerns

Include a copy of the contracts you provide your customers and vendors/suppliers. If your business is bound to other businesses’ contracts, be sure to include copies of those as well.

This folder should also include information on lawsuits and legal claims that have been filed or are pending against your business. Include the outcomes of any cases that have been resolved.


Vendor and supplier relationships

Share a list of the vendors and suppliers you use to help potential buyers understand who your business depends upon.


Key employees

Provide a roster of your employees with their positions and salaries or wages.


The site

If real estate is part of your offer, include your site lease contract (if applicable), a list of improvements you’ve made to the building, and documentation showing the site is OSHA and ADA compliant.


The strength of its competitions

Include a simple list of your major competitors. Prospective buyers will do their own research into their strength and market share, but they’ll appreciate any info you can offer that might guide their work.


Should I worry about sharing this information?

Many of these details are confidential—and key to your business’s success. Safeguard them by requiring prospective buyers to sign a non-disclosure agreement (NDA) before they access the information. You can download a boilerplate non-disclosure agreement from Law Depot, or you can ask an attorney to draft one for you.

Would you like to connect with an attorney? Click the Connect button below to get started.


You can take an additional step and hold back certain pieces of information until receiving a letter of intent (LOI) from an interested buyer. An LOI is an offer to buy your business. However, it’s usually non-binding and depends upon a full review of your business and its records.

What’s next?

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