Due Diligence – Checklist When Buying a Business.
Due diligence is the process of using reasonable care in evaluating a business under consideration for purchase.
Checklist of Information & Documents to Review
(Note: This is a partial list to get you started. The business that you are considering may not require everything listed or may require additional items. You should get professional advice)
- Financial Information
- Audited Financial Statements for three years.
- Schedule of Inventory
- Schedule of Accounts Receivable
- Schedule of Accounts Payable
- Analysis of Gross Margins
- Physical Assets
- A schedule of all fixed assets
- A schedule of all leased equipment
- Real Estate
- Schedule of all company locations
- Copies of leases
- Copies of permits & licenses
- Intellectual Property
- Copies of all patents, copyrights, trademarks, & trade names.
- Description of methods used to protect trade secrets or know-how.
- Copies of all consulting, licensing, and intellectual agreements
- A list of employees including positions, current salaries, salaries and bonuses paid during last three years, and years of service.
- Resumés of key employees.
- The Company’s personnel handbook and a schedule of all employee benefits and holiday, vacation, and sick leave policies.
- Licenses & Permits
- Copies of governmental licenses and permits.
- Tax Returns
- Copies of tax returns for the last three years
- Copy of all products or services provided or under development
- Summary of warranty claims
- List of all pending litigation
- List of unsatisfied judgements
- Copies of all insurance carried