Due Diligence Check List

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.