M&A Due Diligence Checklist

Due diligence is a crucial aspect of any investment, partnership or business deal. It is a thorough examination of every aspect of a business that includes its financial records, compliance with laws and the potential risks.

Making and using a due diligence checklist helps to clarify conversations, swiftly find obstacles to M&A transactions, and allow the stakeholders to concentrate on strategy structure, execution and structure. A due diligence checklist reduces risk by ensuring that all parties are on board with the scope of the investigation, as well as the required documentation.

The due diligence request might include different documents depending on the nature and magnitude of the transaction. All M&A due-diligence documents should contain certain fundamental elements:

Complete financial reports for the last three years are required for most M&A due diligence reviews. These documents help to provide an accurate picture of a target company’s current financial condition and help to identify any areas of opportunity for growth.

Other issues to be considered include the target’s financial obligations and its capital structure. Other areas of concern could be an evaluation of internal processes and supply chain, as well as technology infrastructure, and management team.

A complete due diligence checklist will review a target company’s environmental health and safety practices as well as any regulatory violations. It should also address the company’s stance regarding intellectual property rights and the way it intends to handle a data breach. A due diligence assessment will also examine the company’s contingency plans as well as disaster recovery plan.

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