How far back should I check a business's financial records before making an offer?

There's no fixed legal rule dictating how many years of financial records you must review before making an offer — it's a matter of prudent due diligence, not a statutory requirement, and how far back is worthwhile depends on the business. As a general practice, buyers typically want enough history to see a trend rather than a single snapshot: several years of financial statements, tax filings, and bank records, so seasonal swings, one-off gains, and gradual decline (or growth) show up rather than being hidden inside one good year.

The nuance that trips people up is timing: a full records review is expensive and slow, so most buyers do a lighter look before signing a non-binding letter of intent, then a deeper, more complete review during the exclusivity period that typically follows — with the purchase agreement conditional on the deeper review turning up nothing that changes the picture. Reviewing only the most recent year, or only the numbers the seller chooses to hand over, is the most common mistake.

A Treadstone business lawyer can help structure your offer and purchase agreement so the deeper financial review happens on a proper legal footing, with a genuine walk-away right if it turns something up.