How to get Sellers to share financial information Pre-LOI?

April 30, 2026

by a searcher from Georgetown University in London, UK

BLUF: anyone have a data request checklist they fall back to pre- and post-LOI? Something I'm butting up against for the direct owner outreach I'm doing is data request fatigue from owners. For instance if they are using cash based accounting but I want to be able to do cash and accrual based reconciliations to make an educated valuation. If they don't have a broker helping them shepherd through the process and haven't done a deal before, it is genuinely a lot of work to get these docs. I'm very cognizant of not wanting to overwhelm them with requests but there are key things that I need to get a proper valuation done. Long winded way of saying, anyone have advice on what to ask for pre- and post-LOI and navigating the sensitivity that comes with not wanting to overwhelm an owner?

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Reply by a searcher
from London Business School in Sevenoaks, UK

I think you have taken a wrong turn here. If you’re buying at a size range where companies are cash accounting you have to get comfortable working with what they can produce. I would see as it as on you to produce accrual accounting pro forma’s as in any case anything sell side produces will be woefully inadequate and you’ll end up doing it yourself. A simple workshop / interview going through key revenue recognition, cost recognition points and any off balance sheet liabilities should get you what you need to do it yourself. In the end you may need to think about it as getting comfortable with the revenue profile and then applying what you see as structural margins in the industry plus or minus specific issues you see on the ground with the target. In the end though this is the ball game with smaller businesses and why they trade at the multiples they trade at. You can’t try to DCF your way to a good diligence process in this space and if you can’t get comfortable with the chaos you should look at bigger better organised businesses…

Reply by a professional
from Technische Universität Berlin in Miami, FL, USA

The data request fatigue problem is real and I think it's partly a framing issue. A lot of owners who haven't done a deal before hear "I need your last 3 years of financials" and what they actually process is "this person wants to pick apart everything I've built." In my experience working with small business owners over the years, the requests that land better are the ones framed around understanding the business rather than validating the numbers. "Help me understand how revenue flows through the business" gets you further than "send me your P&L" even if you end up in the same place. It sounds like a small distinction but owner-operators are usually very willing to explain their business to someone who seems genuinely curious. They are often much less willing to hand over documents to someone who feels like an auditor. On the checklist question - a tiered approach seems to work: a short pre-LOI list of 4-5 items that answer the "is this worth pursuing" question, then a more complete post-LOI list once both sides are committed. Asking for everything upfront signals you don't trust them yet, which is true but not a great way to start.

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