M&A Due Diligence Checklist

Due diligence is a critical aspect of any business deal, partnership or investment. It is a thorough review of a company’s financial records as well as compliance with the law, and potential risks.

Making and using the due diligence checklist will help to inform conversations, swiftly detect obstacles to M&A transactions, and allows the stakeholders to concentrate on strategy structure, execution and structure. A due diligence checklist can help reduce risk by ensuring that everyone is 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 scope of the transaction. All M&A due-diligence requests should include certain essential elements:

Financial reports with detailed information covering the past three years are required in most M&A due diligence reviews. These documents give a clear picture of the target company’s financial situation and help to identify areas for growth.

Other aspects of due diligence include the target’s ability to meet its financial obligations and the strength of its current capital structure. Other areas to be considered include an assessment of the management team, internal processes, technology infrastructure, and supply chain.

A due diligence checklist should also include a review of the company’s environmental practices, health and safety. This includes any regulatory violations. It should also contain the company’s position on intellectual property and how it would respond to a breach of data. A due diligence review should also assess the company’s contingency plans as well as disaster recovery plans.

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