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Small Business Sale Preparation Checklist

Three documents and three sheets that price every diligence gap in enterprise value and rank the fixes by dollars recovered per week.

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What you get

Pack of 6 files: 3 documents, 3 spreadsheets

Small Business Sale Preparation Checklist
  • Readiness AssessmentDocument
  • Issue Remediation PlanDocument
  • Seller NarrativeDocument
  • Add-back ScheduleSpreadsheet
  • Customer Concentration AnalysisSpreadsheet
  • Diligence Gap RegisterSpreadsheet
Small Business Sale Preparation Checklist
RiverThe Gap

Readiness Assessment

Cadwell Fabrication, Inc. Revenue 6,420,000, book EBITDA 742,000. Every multiple below is the company's own assumption, held constant across scenarios so the comparison is internally valid.

The two numbers on the tableArithmeticValue
What the seller's packet presents(742,000 + 480,000) x 4.25,132,400
What a buyer computes on day one742,000 x 2.61,929,200
Gap2.66 times apart3,203,200
The gap, decomposedArithmeticAmountShareRecoverable
Add-backs that can be substantiated390,700 x 2.61,015,82031.7%Yes, 19 hours
Multiple held down by fixable facts1,132,700 x 1.61,812,32056.6%Yes, 26 weeks
Add-backs that were never real89,300 x 4.2375,06011.7%No
Sums to3,203,200100.0%
The multiple, walked down from the sector figureDeltaRunning
Sector multiple with no concentration issue4.2
Top customer above 30 percent on purchase orders only-0.73.5
Top three above 55 percent-0.33.2
Owner in the daily production schedule-0.42.8
No reviewed financial statements-0.22.6

Add-backs move earnings and are worth their amount times the multiple. Concentration and key person risk move the multiple, so they compound against every dollar of adjusted earnings at once: one tenth is worth 113,270 here. That is why the largest single block in the gap is the second row and not the first, and why it is also the slowest to close.

RiverAdd-back Schedule

Add-back Schedule

Nine lines as the seller proposed them. An add-back a buyer cannot substantiate is deleted rather than disputed, so its value is zero rather than negotiable.

ItemClaimedHoursValue at 2.6xPer hourVerdict
Owner compensation above a market rate for the role186,0006483,60080,600Survives
Family member on payroll performing no role64,0003166,40055,467Survives
One-time legal fees, a settled supplier dispute47,5002123,50061,750Survives
Non-recurring equipment overhaul38,000298,80049,400Survives
Owner health insurance and personal medical31,400281,64040,820Survives
Personal vehicle, lease and fuel23,800461,88015,470Survives
Owner travel described as business development29,600n/a0n/aDeleted
Charitable donations directed by the owner18,500n/a0n/aDeleted
Miscellaneous, described in the file as owner discretionary41,200n/a0n/aDeleted
TotalsAmountHoursValue at 2.6xPer hour
Claimed by the seller480,000
Survives substantiation390,700191,015,82053,464
Deleted for want of evidence89,300n/a0n/a

The deleted 89,300 does not cost 89,300. It cost 375,060 of enterprise value at the 4.2 it was priced into, and it costs the six lines above it their benefit of the doubt. Remove the three before the packet goes out: a schedule of 390,700 that survives intact is worth more than one of 480,000 that gets audited line by line. Note the second column on the vehicle line. Substantiation rules want records made at or near the time of the expense, so a log written last week is not evidence and a buyer's accountant will say so.

RiverRanked by Lead Time

Diligence Gap Register

Every gap priced in enterprise value, divided by the weeks of lead time it needs, and sorted on the quotient rather than on size.

ItemMovesValueWeeksPer week
Substantiate the six defensible add-backsEarnings1,015,8203338,607
Re-contract Meridian onto a three-year assignable agreementMultiple792,8901079,289
Re-contract Halbrook and Vance onto assignable termsMultiple339,810842,476
Produce reviewed financial statements for two yearsMultiple226,5401218,878
Move the owner out of the daily production scheduleMultiple453,0802617,426
Written IP assignments from three former contractorsDeduction72,00098,000
Resolve the lapsed environmental permit at the second siteDeduction118,000167,375
Reconcile the equipment register to the ledgerDeduction28,00047,000
Assign the two key supplier agreementsDeduction96,000146,857
Document the three undocumented production processesDeduction46,00076,571
Total recoverable3,188,140
What the calendar buysItems reachableValueShare of everything recoverable
4 weeks out2 of 101,043,82032.7%
8 weeks out4 of 101,429,63044.8%
10 weeks out6 of 102,294,52072.0%
12 weeks out7 of 102,521,06079.1%
16 weeks out9 of 102,735,06085.8%
26 weeks out10 of 103,188,140100.0%

The jump between week eight and week ten is one item, Meridian, and it moves the reachable total from 1,429,630 to 2,294,520. That single row is worth setting the timing of the whole process around. Note also that re-contracting changes no revenue, no margin and no customer count: it changes what a buyer inherits. Getting Meridian from 34.0 percent to 20 percent by growing everything else instead needs 4,494,000 of new revenue against a current 6,420,000.

Every checklist for this query is a list of things to gather. Two years of tax returns, the customer contracts, the equipment register, the lease. Gathering is not the problem. A seller who gathers everything and fixes nothing arrives at diligence with a complete file and the same price cut, because the price cut is not caused by the buyer being unable to find documents. It is caused by what the documents say once found.

Cadwell Fabrication is an invented steel fabricator with 6,420,000 of revenue and 742,000 of book EBITDA. Its broker packet presents 5,132,400. A buyer opening the same file computes 1,929,200. The 3,203,200 between them is not a negotiation. It decomposes exactly, into 1,015,820 of add-backs recoverable with nineteen hours of paperwork, 1,812,320 held in the multiple and recoverable only with twenty-six weeks, and 375,060 that was never real and is not recoverable at any lead time.

Those three parts run on different clocks, which is the whole reason to separate them. An add-back moves earnings, so it is worth its amount times the multiple. Concentration and key person risk move the multiple, so they compound against every dollar at once, and one tenth of a turn is worth 113,270 here. Ranking by value per week then reorders the list: nineteen hours of receipts comes first at 338,607 a week, while the largest item ranks fifth and still sets the critical path.

What's in the pack

01

Add-back Schedule

Nine lines with the amount, the hours to substantiate, the specific document a buyer will ask for, and a verdict of survives or deleted. Each priced at the multiple, so the sheet reports an hourly rate for the paperwork rather than a total.

02

Customer Concentration Analysis

Revenue by customer against what actually transfers to a buyer, which is contracts rather than history. Includes the multiple walked down step by step and the new revenue that growth would need to achieve the same thing.

03

Diligence Gap Register

Ten items priced in enterprise value and sorted by value per week of lead time, with a table showing what is reachable at four, eight, ten, twelve, sixteen and twenty-six weeks out, plus the marginal value ladder.

04

Readiness Assessment

The gap decomposed into substantiation, lead time and fiction, with the arithmetic shown for each. Names which part is not recoverable at any lead time and why the deleted lines cost more than their own amount.

05

Issue Remediation Plan

The ranked list turned into a sequence, with the twenty-six week item started in week one because it sets the critical path and ranks fifth by value per week. Names the owner of each item.

06

Seller Narrative

Six sections in a fixed order, built so the hardest fact about the business arrives in the seller's own framing rather than as a diligence finding three weeks later.

How to use it

  1. 1

    Open in River, or download it

    Take the blank Word and CSV files with no account, or install the pack in River and hand it two years of profit and loss plus revenue by customer.

  2. 2

    Mark every add-back survives or deleted

    The test is whether a specific contemporaneous document exists, not whether the cost is genuinely personal. Delete rather than argue, and report the deleted total separately.

  3. 3

    Record what transfers, not what happened

    Nine years of purchase orders with one customer transfers nothing to a buyer. Log the paper behind each of the top five accounts and whether it survives a change of control.

  4. 4

    Rank by value per week and set the date

    Divide each priced gap by its lead time and sort. Then run the lead-time table against the weeks you actually have, and see which items have already become escrow items.

Frequently asked questions

Is this template free?

Yes. Three documents and three sheets download as Word and CSV files with no signup and no credit card. Edit with AI is the optional path where the agent builds the schedules from your own ledger and customer revenue. The rest of the library is at the template index.

What format are the downloaded files?

Word documents (.docx) for the Readiness Assessment, Issue Remediation Plan and Seller Narrative, and CSV (.csv) for the Add-back Schedule, Customer Concentration Analysis and Diligence Gap Register. They open natively in Word, Pages, Google Docs, Excel, Numbers and Sheets.

Why rank by value per week instead of by size?

Because the two orderings disagree. The biggest multiple item here is worth 453,080 and needs twenty-six weeks, so it ranks fifth of ten by value per week while still setting the critical path. A seller with six weeks who works by size finishes nothing.

What actually makes an add-back survive?

A specific document made at the time. Vehicle expense needs a contemporaneous log, because the substantiation rules want records made at or near the time of the expenditure. Owner compensation needs comparable postings plus the payroll record, and the add-back is the difference rather than the salary.

Does the pack tell me what the business is worth?

No, and it is careful not to. Every multiple in it is the company's own assumption, held constant across scenarios so the comparisons stay internally consistent. It prices the gap between two numbers and ranks the work. A broker, an accountant and a transaction attorney do the rest.

What about the tax side of the deal?

Out of scope, with one flag. An asset sale requires buyer and seller to allocate the price across asset classes using the residual method, and both report the same allocation. It drives the seller's tax character, so raise it while the letter of intent is still in draft.

Where does this sit relative to the other packs?

Upstream of everything. The share register it assumes comes from the cap table cleanup pack, the document index a buyer works through is the data room checklist, and once questions start arriving they route through the diligence request tracker.

Sources

  1. eCFR26 CFR 1.274-5 — Substantiation requirements (opens in a new tab)
  2. eCFR26 CFR 1.1060-1 — Special allocation rules for certain asset acquisitions (opens in a new tab)

Written by

Chandler Supple

Co-founder & CEO, River

Chandler has spent the last six years working in AI, building tools for millions of users and Fortune 100 companies. In 2025, he co-founded River to build a new kind of operating system for AI agents.

LinkedInGitHubX

Reviewed by

Brian Joseff, Co-founder, River

LinkedInX

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Find out what diligence will cost before it starts

Download the blank pack as Word and CSV files, or open it in River and have it price your own gaps and rank them against the weeks you have left.

Edit with AI