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Business Condition Statement

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Business Condition Statement

Recitals

WHEREAS, Client Name: is engaged in the operation of the business identified below and has requested a contemporaneous statement of the business condition as of the Effective Date specified herein; and

WHEREAS, Provider Name: has agreed to prepare and certify this Business Condition Statement for the purposes described in this document and to make certain representations and warranties concerning the business condition set forth below.

WHEREAS, the parties intend that this Business Condition Statement shall be relied upon by the parties and their authorized representatives, and incorporated into any related business agreement to the extent expressly provided.

Business Identification

Effective Date:   Prepared By:

Corporation    Limited Liability Company (LLC)    Partnership    Sole Proprietorship    Other:

Scope of Work

The Provider shall prepare and deliver a written statement describing the present business condition of the Business identified above, including financial position, material obligations, compliance status, and operational matters. The Statement will be based upon records and representations provided by the Client and shall be limited to the information available as of the Effective Date.

Financial Condition

Gross Revenue (last fiscal year): $   Net Income (last fiscal year): $

Current Assets: $   Current Liabilities: $   Working Capital: $

Financial statements attached:

Material Contracts, Obligations, and Encumbrances

Litigation, Claims, and Compliance

Pending litigation or administrative proceedings: Yes No

Employees and Benefits

Number of employees (full-time equivalent):   Are there union relationships? Yes No

Environmental and Regulatory Matters

Known environmental liabilities or regulatory violations: Yes No

Representations and Warranties

The Client represents and warrants to the Provider that, to the best of the Client's knowledge after due inquiry: (a) the information supplied to the Provider for the preparation of this Statement is true, accurate, and complete in all material respects as of the Effective Date; (b) no material contract, liability, tax obligation, or contingency has been omitted; and (c) there has been no material adverse change to the business, operations, or financial condition of the Business since the Effective Date disclosed herein except as expressly noted in this Statement.

The Provider warrants that the Statement prepared will be a fair and accurate reflection of the information provided and the Provider's reasonable review of records, and will not knowingly omit material facts required to present the business condition fairly. The Provider makes no independent audit-level assurances unless expressly agreed in writing and separately compensated.

Payment Terms

Payment Amount: $

Late fee for overdue payments:   Accepted payment methods:

Term and Termination

Term Start Date:   Term End Date:

Confidentiality

The parties acknowledge that information disclosed in connection with this Statement may constitute Confidential Information. Each party agrees to maintain confidentiality of such information and not to disclose it to third parties except to the extent required by law or to professional advisors on a need-to-know basis who are bound by comparable confidentiality obligations. Confidential Information shall not include information that is or becomes publicly available through no breach of this agreement.

Governing Law

This Business Condition Statement shall be governed by and construed in accordance with the laws of the jurisdiction of: without regard to conflicts of laws principles.

Entire Agreement

This Statement, together with any attachments or exhibits expressly incorporated by reference, constitutes the entire agreement between the parties with respect to the subject matter hereof. It supersedes all prior discussions, understandings, and agreements, whether written or oral, relating to the subject matter of this Statement.

Certifications and Authorizations

The undersigned certifies that the information provided in this Business Condition Statement is true, complete, and accurate in all material respects as of the Effective Date and that the undersigned is authorized to execute this Statement on behalf of the party identified.

Business Representative

Print Name:

By:

Date:

Counterparty Representative

Print Name:

By:

Date:

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What a Business Condition Statement Is and When it’s Used

A Business Condition Statement is a formal written record that describes the current operational, financial, and physical condition of a business at a given date. It typically summarizes assets, liabilities, operating status, pending obligations, material contracts, and known risks or defects that affect value or performance. Lenders, buyers, insurers, franchisors, and regulatory reviewers often request this document during due diligence, financing, sale, or compliance reviews. The statement serves as a baseline for negotiation, risk allocation, and ongoing monitoring when attached to transaction files or contract exhibits.

Why a Clear Business Condition Statement Matters

A precise Business Condition Statement reduces information gaps, supports decision-making in transactions, and documents current facts for future comparison. Accurate statements can limit post-closing disputes, align expectations between parties, and provide evidence for regulatory or lending reviews under state and federal rules.

Why a Clear Business Condition Statement Matters

Who Typically Prepares and Reviews This Statement

Typical preparers and recipients vary by transaction type but share the need to confirm factual conditions before material decisions are made.

  • Business owner or CFO preparing an internal declaration for buyers or lenders.
  • Buyers, investors, or acquirers verifying facts during due diligence or letter-of-intent review.
  • Lenders and underwriters requiring up-to-date condition information before advancing funds.

In many cases the preparer signs under penalty of accuracy; reviewers should confirm attachments and supporting records before relying on the statement.

Essential Sections to Include in a Professional Statement

A complete Business Condition Statement groups facts into clear sections so recipients can verify information quickly and attach supporting documents where required.

Identification

Business legal name, DBA, entity type, state of organization, and EIN where applicable; identifies the reporting entity precisely.

Effective Date

Single date the statement describes; all schedules and financial snapshots should reference this date for consistency.

Financial Summary

High-level balances (cash, receivables, short-term liabilities) with pointers to audited or management-prepared statements as exhibits.

Operational Status

Notes on active operations, workforce levels, key contracts, ongoing disputes, or material operational disruptions.

Material Obligations

List of loans, guarantees, leases, liens, licensing conditions, and contingent liabilities that affect the company’s obligations.

Known Risks

Open litigation, regulatory investigations, environmental issues, or other conditions likely to affect value or continuity.

Required Fields Commonly Found on the Form

Business Name: Legal entity name
Effective Date: MM/DD/YYYY
Contact Person: Name and title
Address: Street, city, state, ZIP
EIN or TIN: Federal employer ID
Statement Scope: Assets, liabilities, operations

Step-by-Step: Completing a Business Condition Statement

Follow these sequential steps to prepare a compliant, verifiable statement that supports due diligence and lender reviews.

  • 01
    Gather Records: Collect bank statements, ledgers, lease and loan documents
  • 02
    Set Effective Date: Choose a single cut-off date for all schedules
  • 03
    Draft Sections: Populate identification, finances, obligations, and risks
  • 04
    Attach Evidence: Include exhibits (financial statements, contracts)

How to Customize the Statement for Online Completion

Configure the digital form to collect consistent data, capture signer intent, and attach supporting files for verifiable records.

Field Configuration
Effective Date Field Required; MM/DD/YYYY validation
Numeric Fields Currency format; decimal validation
Attachment Field Allow PDF/DOCX upload; max 25 MB
Signature Field Require signer name, title, and timestamp

Where to Send and How the Document Flows

Typical routing ensures the statement reaches all necessary stakeholders and that the process captures an audit trail.

  • Prepare: Preparer populates fields and attaches exhibits
  • Review: Internal reviewer or counsel verifies accuracy
  • Sign: Authorized signer executes electronically or physically
  • Distribute: Send to lenders, buyers, or insurers with certificate

Digital Signing and eSubmission Requirements

Use a platform that supports audit trails, signer authentication, and preserved attachments for legal reliability.

  • File Formats: PDF | DOCX supported
  • Authentication: Email, SMS code, or stronger
  • Audit Trail: Timestamps, IP, action log

Integrations with systems like Salesforce, NetSuite, or Google Workspace streamline distribution and recordkeeping; ensure any selected vendor provides HIPAA or SOC 2 assurances when handling protected data.

Timing Considerations and Processing Expectations

Be mindful of effective dates, lender or buyer deadlines, and retention requirements that affect when to finalize and deliver the statement.

Effective Date Alignment:

Set to match financial statements or valuation date

Lender Submission:

Deliver prior to loan closing or funding

Buyer Due Diligence:

Provide within agreed DD period

Regulatory Review:

Submit when requested by regulator

Document Retention:

Keep original and signed copy per policy

Common Mistakes to Avoid

  • Omitting the effective date or using inconsistent dates across attachments
  • Providing unaudited or unsupported figures without references to source documents
  • Failing to disclose material contracts, liens, or pending litigation
  • Allowing unsigned or improperly authorized signers to execute the statement

Risks and Potential Consequences of Inaccurate Statements

Contract Liability: Breach claims or indemnity exposure
Financing Delay: Funding may be postponed
Deal Repricing: Purchase terms may be renegotiated
Regulatory Scrutiny: Agency inquiries or sanctions
Insurance Impact: Coverage disputes or premium changes
Reputational Harm: Loss of trust with counterparties

How This Statement Differs from Similar Documents

Compare the Business Condition Statement to other commonly requested records to choose the right document for each transaction.

Criteria Business Condition Statement Property Condition Disclosure
Primary Focus business operations real property defects
Typical Use m&a, lending real estate sale
Required Attachments financials, contracts inspection report
Signatory authorized officer seller or agent

eSignature Vendor Comparison for Executing a Business Condition Statement

Key product attributes and price points to consider when choosing an eSignature provider for preparing and delivering signed Business Condition Statements.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently Asked Questions About the Business Condition Statement

Answers to common questions on execution, evidence, revisions, and electronic signing of Business Condition Statements.


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