Checklist for Due Diligence

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A due diligence report is generally used during the sale or purchase of a business. If you are the seller, preparing a complete due diligence will help ensure you enact your transaction in a professional manner. Honesty and integrity are vital when preparing your due diligence. Due diligence is the final step before the sale of a business is complete--it is the time when the potential buyer will have access to the company's books and financial information to ensure that data is recorded accurately and truthfully.

Finances

  • Due diligence checklists should contain information from your annual and quarterly financial statements, financial projections, capital structure and other information such as taxes information and accounting policies. Information on real estate holdings, leases, mortgages or deeds is an integral part of your due diligence.

Products

  • Products should be described in some detail, which includes existing customers, growth rates, new products and cost structure. Customer information should include at least the top 15 customers for the past two years, relationships with the customers, revenue and a listing of contact by name and phone number. Vendor (supplier) information should cover at least 10 suppliers over the past two years and should include contact name, phone number and major items purchased from each vendor.

Competition

  • The Competition section should describe your market position and the strengths and weaknesses you have in that marketplace. Include information on the pricing, service and technology relating to your competition.

Marketing, Sales, Distribution

  • Marketing and Sales should also include information on Distribution. Include strategy and implementation for both domestic and international products. A customer list including prospect for growth and future analysis is an important piece of this section. Also include your plans for generating new business, productivity model for your sales force (compensation, etc) and how to plan to implement your marketing plan.

Research and Development

  • Research and development plans should include strategies and key personnel, including new product information with any risks associated with research and development.

Management, Personnel

  • The Management and Personnel section contains your company's organization chart, headcount by product and biographies of senior management. Compensation is included in this section, as well as stock plans and other incentives.

Legal Matters

  • Legal Matter wraps up your due diligence. This section includes details on any pending litigation against the company or initiated by the company. Safety and regulation information, copyrights and licenses, and a summary of your insurance is part of this section. Finally, include any information pertaining to regulatory agency problems and a summary of all your material contacts.

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