An M&A due diligence checklist to help with this process
Mergers and acquisitions (M&A) create many opportunities, but they also bring risks. Before any M&A transaction, it’s important that you perform thorough due diligence. An M&A due diligence checklist can help with this process. A well-crafted acquisition checklist should consider the buyer’s specific requirements, the characteristics of the entities involved, their management and ownership structures, industry dynamics, and company histories. Additionally, the checklist should be adaptable, with the level of detail varying based on the nature of the transaction including size.
General Corporate Matters
Gather organizational documents and corporate records for a company and its subsidiaries. Including:
- Articles of incorporation and amendments
- Bylaws and amendments
- Meeting minutes
- Organizational charts
- List of current officers and directors
- List of shareholders and the number of shares each holds
- List of all states the company is qualified to do business in
- Business licenses and permits
- Good Standing and tax authority certificates
Financials
To gain a thorough understanding of the company’s financials, review the following:
- Cash flows
- Balance sheet
- Quality of earnings
- Accounting compliance
- Any significant operating and financial trends
- GAAP and SEC reporting compliance
- Valuation and financial modeling
- Operating or SG&A (selling, general, and administrative) expenses
Tax
Evaluating tax reports, filings, and agreements can help inform potential risks and opportunities in the transaction. Examine:
- Federal, state, local, and foreign income or other tax filings
- Sales and use tax reports
- Audit and revenue agency reports
- Tax settlement documents
- Tax sharing or tax benefit agreements
- Employment tax filings
- Tax liens