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TOOLS: GENERAL DUE DILIGENCE LIST



By Manish Kumar Maheshwari



Investment Bankers / Management Consultants are often asked for the basic framework of what makes up a reasonable Due Diligence information pack. Provided below is a very basic high level outline of potential information for inclusion.



General Information

  • Executive summary on Operations of business.
  • Copy of business plan, and if in existence separate plans (Marketing, Finance, I.T., Sales etc,).
  • Copies of marketing information and other corporate brochures.
  • Company structure detailing all companies in the group (including subsidiaries   or companies in which investment).


Legal Documents

  • Certificates of incorporation, Articles of Association & any shareholder agreements.
  • Register of shareholders and any other security holders (convertible notes, etc.).
  • Key commercial contracts including with suppliers, clients, financiers, landlords, etc.
  • Information on any litigation in which the company is involved.
  • Copies of ant intellectual property including patent, trademark, copyright, URL. etc.


Human Resource

  • Copies of Management contracts, bonus schemes, option schemes, etc.
  • HR matrix detailing all employees, contractors, consultants, etc.
  • Human Resource gap analysis discussing where next hires in business would be.


Operations

  • Location of all operations & explanation of role of each.
  • Utilization & capacity of each facility.
  • Age & condition of facilities including discussion on potential upgrades.
  • List of suppliers & customers (which can be sanitized).


Financial

  • Financial Statements for the previous 3 years (preferably audited).
  • Current and forecast budgets.
  • Tax returns from previous 3 years.
  • Capital expenditure programme for current, previous and forecast years.
  • Asset Register.
  • Breakdown of clients on a % basis to contribution of revenue.


Information Technology

  • Information of software Licenses.
  • Discussion paper on redundancy and disaster recovery.
  • Copies of any I.T. audits conducted.
  • Information on data management procedures.


Other Information

  • Any environmental issues?
  • Include competitor analysis.
  • Include Industry research.
  • Include other relevant & material documents.


The establishment of a detailed Due Diligence programme is a critical step in any Corporate Finance process.




Category Others, Other Articles by - Manish Maheshwari 



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