31 Aug M&A Due Diligence Checklist
Due diligence is an essential part of any partnership, investment or business deal. It is a thorough review of the financial records of a company as well as compliance with the law, and the potential risks.
Utilizing the due diligence checklist will help to clarify conversations, swiftly find obstacles to M&A transactions, and allows stakeholders to focus on strategy structure, structure and execution. By ensuring all parties are on the same page with regards to the scope of the investigation and the documentation needed A due diligence checklist can be an effective tool for reducing the risk.
The type of documentation included in due diligence requests will vary depending on the nature of the transaction. However, there are basic components that all M&A due diligence requests must include:
Comprehensive financial reports that cover the last three years are required in the majority of M&A due diligence reviews. These documents present an accurate picture of the target company’s financial status and help identify areas of growth.
Other aspects of due diligence include the capability of the target to meet financial obligations and the strength of its current capital structure. Other areas of interest could 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 in terms of health and safety. This includes any regulatory violations. It should also detail the company’s position on intellectual property and how it plans to respond to a data breach. A due diligence assessment should also assess the company’s contingency plan and disaster recovery plan.
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