The package is your side of diligence: everything a buyer will ask for, assembled, named consistently and organized so that a stranger can find things. Preparing it before marketing is the single cheapest thing a seller can do, and it is also the only preparation that improves both the speed and the price.
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How to organize the due diligence packet
Folders by stream rather than by date: financial, tax, legal and corporate, contracts, people, operations, property, insurance. Consistent file names with the period in them. A single index document listing what exists and what does not. Buyers and their advisers work through a list, and a package that maps to that list removes days of back and forth.
What due diligence documentation goes in, and when
Everything factual goes in eventually. What is staged is the sensitive material: customer names, pricing by customer, supplier terms and employee level pay data. Those belong behind a letter of intent, and in a sale to a competitor they may be released only to the buyer's advisers rather than to their staff.
Keeping it current
A sale takes months, so the package ages. Refresh the year to date figures monthly, add anything material that happens, and keep a log of what was provided and when. That log is worth having later: it is the evidence of what a buyer was told, which is the foundation of the disclosure schedules.
Questions people ask about due diligence package
Do I need a data room for this?
For anything with institutional buyers, yes, and they are inexpensive. For a small sale a well organized shared folder with access logging is adequate.
How big is a typical package?
For a small business, a few hundred documents. The number matters less than whether the index is accurate and the naming is consistent.
Should I include bad news?
Yes, with the remediation attached. Disclosed problems cost a discount; discovered ones cost trust in everything else.