A due diligence checklist is an essential tool to ensure that each aspect of an M&A deal is covered. A thorough due diligence process can to avoid costly errors which could cause a halt to a merger or acquisition.
A typical due diligence check list may include documents related to the company’s finances, legal operations as well as intellectual property, its human resources as well as sales and marketing information, and much more. Each checklist will be different based on the sector, and the specific requirements of the business.
Financial due diligence (also referred to as accounting due due diligence) involves a thorough examination of a company’s financial position that includes accounts payable, receivables cash flow, tax risks. It should also consist of a thorough examination of historical trends and projections, as well as the company’s capacity to meet its debt and other financial obligations.
Human capital due diligence is an in-depth review of the company’s present and future staffing requirements. This includes the list of all employees, their salaries title, job titles, qualifications and qualifications. It is also important to review time off policies and the company’s benefit plans.
Operational due-diligence is an in-depth review of a company’s internal procedures and infrastructure including its supply chain. It could also include an examination of the company’s compliance with various laws and regulations. It could also comprise an examination of the warranty policy of the company, pricing philosophy, and estimation department.
As you prepare your due diligence checklist, it’s important to keep it up to date whenever changes happen. This will ensure buyers get the most accurate and complete information available. Keep organized records in folders with clearly defined titles to help buyers.