# Diligence checklist: buying or selling a business · Horizon Canonical: https://withhorizon.co/diligence-checklist Diligence checklist · Free tool # Buying or selling: the essentials. Everything a buyer will ask for, and what to fix before they find it. Check items off as you go. Your progress saves on this device, so bookmark this page and come back. 0% 0 of 114 items Start where you are. Most owners already have a third of this. Tick what you have, and you'll see your gaps in minutes. 1. 1Choose selling or buying above 2. 2Open an area and tick what you already have 3. 3Come back any time. Your ticks are saved here Saved on this device. Bookmark to come back. Eight areas [Corporate records and governance0/17](#corp)[Contracts and commercial agreements0/15](#contracts)[Workforce and employment0/18](#people)[Financial documentation0/16](#finance)[Tax0/12](#tax)[IP and technology0/14](#ip)[Regulatory, compliance and insurance0/13](#reg)[Client-facing terms and privacy0/9](#terms) The first documents any buyer or their counsel asks for. If any are missing, that is a finding in itself. Gather Review for Area done. That's one less thing anyone can surprise you with. AI review prompt for this area I am preparing for M&A due diligence on a Canadian corporation. I have uploaded its governance documents: articles, by-laws, shareholders' agreement(s), cap table, entity chart, registers, resolutions and annual filings. Produce a structured report with these sections: 1. Ownership summary: every share class and holder, percentage ownership, and outstanding options, warrants or convertibles. Flag any mismatch between the cap table and the articles. 2. Change-of-control restrictions: consent thresholds, ROFR, ROFO, drag-along, tag-along and shotgun clauses. 3. Governance red flags: unusual limits on directors, missing annual filings, conflicts between by-laws and the shareholders' agreement. 4. Entity structure: map parent, subsidiaries and holdcos. Flag inactive or redundant entities. 5. Valuation mechanisms that could conflict with a negotiated price. 6. Related-party transactions not on arm's-length terms. For each finding, cite the document and clause, describe the issue, and rate it blocker, flag or clean. Blockers first. I am preparing for M&A due diligence on a Canadian corporation. I have uploaded its governance documents: articles, by-laws, shareholders' agreement(s), cap table, entity chart, registers, resolutions and annual filings.… Paste into your AI tool with your documents. A first-pass screen, sorted blockers first. Where deals most often stall. One change-of-control clause can delay or collapse a transaction. Gather Review for Area done. That's one less thing anyone can surprise you with. AI review prompt for this area I am preparing for M&A due diligence on a Canadian business. I have uploaded its key commercial contracts: client, loan, vendor and SaaS, licensing, leases, partner and agency agreements. Build a master tracker with one row per contract covering: 1. Change of control: restrictions, notice or termination rights, and whether a share sale, asset sale or amalgamation triggers it. 2. Assignment: can it be assigned, is consent required, and is consent "not to be unreasonably withheld"? 3. Termination triggers, including convenience, corporate events, insolvency and material adverse change. 4. Renewal dates and notice periods. 5. Exclusivity or non-compete restrictions. 6. Data ownership and portability. Rate each contract clean, flag or blocker, sort blockers first, and highlight any contract needing consent before closing. I am preparing for M&A due diligence on a Canadian business. I have uploaded its key commercial contracts: client, loan, vendor and SaaS, licensing, leases, partner and agency agreements. Build a master tracker with one… Paste into your AI tool with your documents. A first-pass screen, sorted blockers first. A buyer is acquiring your team as much as your revenue. Relationships need to be clean and survive the deal. Gather Review for Area done. That's one less thing anyone can surprise you with. AI review prompt for this area I am preparing for M&A due diligence on a Canadian business operating mainly in Ontario. I have uploaded employment agreements, offer letters, contractor agreements, a compensation schedule, benefits summary, org chart, handbook and any collective agreements. Produce a report covering: Employees 1. Termination exposure: compare each contractual clause to ESA minimums and an estimate of common law notice. Flag clauses that may be unenforceable. 2. Change-of-control provisions: enhanced severance, accelerated vesting, retention bonuses or constructive dismissal rights. 3. IP assignment and moral rights waivers. 4. Restrictive covenants: flag non-competes for non-executives and assess non-solicits. 5. Confidentiality gaps. 6. Handbook policies that conflict with the ESA or create implied obligations. Contractors 7. Classification risk under the CRA four-point test. 8. Assignment on a share vs. asset purchase. 9. Legacy agreement variations and the share of contractors who would need to re-sign. Organize by severity: blockers, then flags, then clean. I am preparing for M&A due diligence on a Canadian business operating mainly in Ontario. I have uploaded employment agreements, offer letters, contractor agreements, a compensation schedule, benefits summary, org chart, … Paste into your AI tool with your documents. A first-pass screen, sorted blockers first. A buyer will build their own model from your raw data. Gaps and inconsistencies erode trust faster than bad numbers. Gather Prepare Area done. That's one less thing anyone can surprise you with. AI review prompt for this area I am preparing for M&A due diligence on a Canadian business. I have uploaded 3 years of financial statements, T2 returns and Notices of Assessment, monthly revenue, YTD P&L and balance sheet, debt schedule, AR and AP aging, HST/GST returns and bank statements. Produce a report covering: 1. EBITDA normalization: every potential adjustment, categorized as non-recurring, owner-specific or synergy. Flag any without clear support. 2. Revenue quality: top 5, 10 and 20 client concentration, channel concentration, recurring vs. one-time. Flag any client above 15% or channel above 40%. 3. Working capital: average monthly working capital for 3 years, seasonality, and items a buyer would adjust in a peg. 4. Reconciliation: compare revenue across statements, tax returns and HST filings, and bank deposits for the last 12 months. 5. Debt: every instrument with balance, rate, maturity and change-of-control terms. 6. Unit economics if data allows. Order findings by impact on valuation, with data source and likely effect on a buyer's model. I am preparing for M&A due diligence on a Canadian business. I have uploaded 3 years of financial statements, T2 returns and Notices of Assessment, monthly revenue, YTD P&L and balance sheet, debt schedule, AR and AP agi… Paste into your AI tool with your documents. A first-pass screen, sorted blockers first. Where transactions get re-priced. Hidden liabilities or structural issues can cut your net proceeds or change the deal. Gather Review for Area done. That's one less thing anyone can surprise you with. AI review prompt for this area I am preparing for M&A due diligence on a Canadian corporation. I have uploaded T2 returns and Notices of Assessment, CRA correspondence, HST/GST returns, payroll remittances, SR&ED claims, loss carryforwards, deferred tax schedules and details of any holdco, trust or estate freeze. Produce a report covering: 1. Deal structure: share sale vs. asset sale consequences, including LCGE eligibility, prior claims and disqualifying factors, recapture and goodwill allocation. 2. CRA exposure: open assessments, audits or aggressive positions. 3. Contractor withholding and reclassification exposure. 4. HST consistency against reported revenue. 5. Tax attributes: loss carryforwards, expiry dates and change-of-control limits. 6. Structural review: does the current structure support a tax-efficient sale? 7. Deferred tax assets and liabilities at risk. For each finding, cite the source, the issue and the estimated dollar impact. Organize by severity. I am preparing for M&A due diligence on a Canadian corporation. I have uploaded T2 returns and Notices of Assessment, CRA correspondence, HST/GST returns, payroll remittances, SR&ED claims, loss carryforwards, deferred t… Paste into your AI tool with your documents. A first-pass screen, sorted blockers first. A buyer will confirm you actually own what you think you own, and that it's protected. Gather Review for Area done. That's one less thing anyone can surprise you with. AI review prompt for this area I am preparing for M&A due diligence on a Canadian business. I have uploaded IP assignments, trademark and domain records, a technology and SaaS inventory, open-source inventory, data architecture documents, continuity plans, security reports and penetration tests. Produce a report covering: 1. IP ownership gaps for every piece of proprietary technology or creative work. 2. Privacy and data compliance against PIPEDA, and PHIPA if relevant. 3. Domain and trademark ownership and status. 4. Third-party licensing that limits a buyer or is non-transferable. 5. Open-source copyleft exposure. 6. Vendor lock-in and switching costs. 7. Business continuity and single points of failure. 8. Open findings in security certifications. 9. Critical or high findings from penetration tests and their status. Rate each finding blocker, flag or clean, organized by severity. I am preparing for M&A due diligence on a Canadian business. I have uploaded IP assignments, trademark and domain records, a technology and SaaS inventory, open-source inventory, data architecture documents, continuity p… Paste into your AI tool with your documents. A first-pass screen, sorted blockers first. Licenses, lawsuits and policies that don't transfer are the surprises buyers price in as risk. Gather Review for Area done. That's one less thing anyone can surprise you with. AI review prompt for this area I am preparing for M&A due diligence on a Canadian business operating mainly in Ontario. I have uploaded litigation records, regulatory correspondence, licenses and permits, certifications, workplace safety records, accessibility and privacy assessments, and insurance policies. Produce a report covering: 1. Litigation and regulatory risk with estimated exposure for each matter. 2. License and permit status, renewals within 6 months, and any that do not transfer on a change of control. 3. Workplace compliance and WSIB status. 4. AODA and privacy assessments. 5. Insurance: type, carrier, coverage, premium, deductible, expiry and transferability. Flag gaps in D&O, cyber and professional liability. Rate each finding blocker, flag or clean, and note items that usually appear as representations and warranties. I am preparing for M&A due diligence on a Canadian business operating mainly in Ontario. I have uploaded litigation records, regulatory correspondence, licenses and permits, certifications, workplace safety records, acce… Paste into your AI tool with your documents. A first-pass screen, sorted blockers first. Your terms and privacy policy govern every customer relationship, and what a buyer can do with that data. Gather Review for Area done. That's one less thing anyone can surprise you with. AI review prompt for this area I am preparing for M&A due diligence on a Canadian business. I have uploaded its terms of service and privacy policy. Produce a report covering: Terms of service 1. Assignment and change of control of accounts and data. 2. Limitation of liability and uncapped exposure. 3. Termination and refund obligations that survive a sale. Privacy policy 4. Whether a sale is a new purpose needing fresh consent, and whether the PIPEDA business transaction exemption (s. 7.2) applies. 5. Coverage of the ten PIPEDA fair information principles. 6. Third-party data sharing disclosures. 7. Data portability and deletion. 8. PHIPA, if health information is involved. Rate each finding blocker, flag or clean, and estimate the effort to fix each blocker or flag. I am preparing for M&A due diligence on a Canadian business. I have uploaded its terms of service and privacy policy. Produce a report covering: Terms of service 1. Assignment and change of control of accounts and data.… Paste into your AI tool with your documents. A first-pass screen, sorted blockers first. 0% ready You're further along than most. Want a second set of eyes? In 30 minutes, one of our cofounders will walk your gaps with you and show you which ones a buyer would actually price in. [Book a readiness review →](/discovery-call?interest=diligence) Pulling it together ## The 48 hour rule. The goal is a data room you could open within 48 hours of signing a letter of intent. Not because a deal is coming, but because readiness gives you options. Anything you can't find in 48 hours is a gap to close now, before it becomes someone else's finding. Use a secure data room, or at least a shared drive with link sharing off. One folder per area, and a master index listing every file. 1. 01Corporate records and governance 2. 02Contracts and commercial agreements 3. 03Workforce and employment 4. 04Financial documentation 5. 05Tax 6. 06IP and technology 7. 07Regulatory, compliance and insurance 8. 08Client-facing terms and privacy ## Ready is a position of strength. The Value Baseline runs these checks with you, scores them against the best businesses in your market, and tells you what to fix first. [Book a discovery call →](/discovery-call?interest=diligence) This checklist is general information, not legal, tax, accounting or other professional advice. Every business and transaction is different; talk to qualified advisors before acting on any item. AI prompts are a screening aid only. Validate every finding with your advisors, and use a business account with model training and data sharing turned off. Your progress is saved on this device only unless you choose to save it to your email. Halfway through the list Want a cofounder to look at your gaps with you? A 30-minute discovery call. We'll tell you which gaps a buyer would actually price in, and which can wait. [Book a discovery call](/discovery-call?interest=diligence) 0 down. Nice work. Save your progress so it follows you to any device, and unlock the AI review prompts for all eight areas.