Sample Due Diligence List
|Disclaimer: This sample due diligence list IS NOT TO BE USED AS AN ACTUAL DUE DILIGENCE LIST, its purpose is to act as a guide in creating a due diligence list for acquisition of a particular business. Your attorney or accountant can provide you with additional suggestions.|
A. GENERAL INFORMATION
Review organization chart and other information regarding structure of the Company, including subsidiaries and other affiliates, % ownership and jurisdiction of each organization.
Review list of officers, directors and key management/supervisory personnel with appropriate background information regarding credentials.
Review summary of number of employees with relevant information, by functional group (Sales, Marketing, R&D, G&A, etc.) with approximate total wage/salary cost of each category.
B. ORGANIZATIONAL MATTERS
Review all corporate charter documents and by-laws (including all amendments to date), if applicable, of the Company and any other corporation, partnership or other entity in which the Company has an equity interest, which relates to any business of the Company (an “affiliate”). Check for any unusual clauses, preemptive rights, cumulative voting, special majority and quorum requirements.
Review any authorization necessary to transact business in foreign jurisdictions (if applicable).
Review all minutes of meetings of boards of directors, committees (including executive and finance), and shareholders for the past five years.
Review all stock transfer and certificate books, ledgers and records of the Company. For each class of stock, review listing of current shareholders indicating name, number of share owned and special restrictions (if any).
For each class of stock review listing of holders of options, warrants, rights, etc. indicating related terms (issue date, exercise date and price, vesting, etc.). Also, review copies of form of warrant, option, right agreement, etc.
Review agreements relating to the purchase, sale or issuance of securities, including any warrants or options.
Review all agreements under which any person has registration rights for any securities of or preemptive rights for shares of capital stock of the Company.
Review information on any treasury stock acquisition or any obligation to issue or repurchase shares.
For each class of debt, review listing of debt holders.
Review details regarding all voting agreements, voting trusts and proxies relating to capital stock of the Company.
Review listing and appropriate details regarding investments in other corporations or entities.
Review information regarding all corporate and fictitious names used by the Company and any predecessors in the past five years.
Review names, addresses, and contacts of Company’s professional advisors, including attorneys, auditors, lenders and investment bankers.
Review copies of the legal representation letters sent to the Company’s auditors with Company responses, for the past five years. Review a summary of all litigation or arbitration, claims and proceedings (whether pending or threatened), to include worker’s compensation actions, in which the Company or any affiliate or any officer or director of the Company is a party. Include a brief description of the following:
- Nature of proceeding
- Date commenced
- Amount of damages and/or other relief sought
- Name of firm and attorneys representing Company or affiliate
- Get a legal opinion on the assessment of likely outcome
Review all litigation files relating to any pending or threatened legal proceedings in which the company, affiliate, officer or director is a party.
Review all consent decrees, injunctions, judgments, other decrees or orders, settlement agreements, and other agreements to which the Company is bound, that require the payment of money by the Company or prohibit any activity by the Company.