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Due Diligence Checklist (General)



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When setting your business ready for sale, be prepared to meet a demanding, professional buyer. Below is a basic list of topics that you may need to check in the course of Due Diligence process.

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View all document templates and forms required for the sale of a business.


Due Diligence Checklist

1. Financial information about the company

  1. Last 3 years annual and quarterly financial information, including balance sheets, cash flows, income statements and footnotes.
  2. Planned projects versus end results.
  3. Management financial records.
  4. Breakdown of sales and gross profits by: geography, channel and product type.
  5. Any existing backlog by customer.
  6. Existing accounts receivable aging schedule.
  7. Next three years quarterly financial projections.
  8. Revenue by channel, customers and product type.
  9. Major growth prospects and drivers.
  10. Business predictability analysis.
  11. Risk associated with foreign operations: government instability, exchange rate fluctuation.
  12. Company and industry pricing policies.
  13. Different economic scenarios based on price and market fluctuations.
  14. Explanation of working capital arrangements, depreciation and projected capital expenditures.
  15. Assumption of external financing arrangement.
  16. Risk management plan
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2. Capital structure

  1. Current outstanding shares.
  2. List of all stockholders with company shareholdings, warrants, options, or notes.
  3. Schedule of all warrants, rights, options.
  4. Summary of all bank loans / debt instruments with key terms and conditions.
  5. Liabilities (including off-balance-sheet items).

3. Other financial information

  1. Summary of current state, federal and any foreign tax positions (including net operating loss carry-forwards).
  2. General accounting policies, such as revenue recognition.
  3. Schedule of financing history for warrants, equity and debt (dollar investment, investors, percentage ownership, implied valuation, date and current basis for each round).

4. Products (description of each product line)

  1. Major applications and customers.
  2. Projected and historical growth rates.
  3. Market share analysis.
  4. Nature and speed of technological change (analysis).
  5. Timing of product enhancements, new products.
  6. Profitability and cost structure analysis.

5. Customer information

  1. List of past 3 years top 15 customers and current year’s up-to-date contact information (name and contact name, address, phone number, timing of purchase and product owned).
  2. A list of strategic relationships (name and contact name, phone number, marketing agreements and revenue contribution).
  3. Description of any important severed relationships within the last 2 years (name and contact name, phone number).
  4. List of past 3 years top 10 suppliers and current year’s up-to-date contact information. (name and contact name, phone number, supplier agreements and purchase amounts).
  5. Competition (description of the competitive landscape).
  6. Market position of the competition, related strengths and weakness (SWOT).
  7. Basis of competition (service, distribution, technology, price).

6. Marketing, sales and distribution (strategy and implementation)

  1. Discussion of national and any international distribution channels.
  2. Company’s position and its products.
  3. Marketing risks and opportunities.
  4. Description of marketing packages and examples of recent product/public relations/marketing/ media information on the company.

7. Major customers

  1. Trends and status of relationships.
  2. Prospects of future development and growth.
  3. Pipeline product analysis.

8. Research and development

  1. Strategy, key personnel and major activities.
  2. New product pipeline (timing and status, cost of development, risks and critical technology necessary for implementation).

9. Management and personnel

  1. Organization chart, project and historical headcount by location and function.
  2. Biographies of senior management, including service with the company, year in current position, employment history and age.
  3. Compensation arrangements: benefit plans, summaries of key employment agreements.
  4. Any significant employee problems, present or past.
  5. Personal data for the last 2 years and benefit plans.

10. Legal and related matters

  1. Any pending lawsuits against the company (brief history, status, anticipated outcome, detail on claimant and claimed damages, name of the company’s counsel).
  2. Pending lawsuits initiated by the company (brief history, status, anticipated outcome, detail on defendant and claimed damages, name of the company’s counsel).
  3. Employee safety and environmental liability issues (safety precautions and new regulations and their consequences).
  4. List of trademarks, copyrights, licenses and material-patents (issued and pending).
  5. Summary of any material exposures or insurance coverage.
  6. Summary of material contracts and any history of the SEC or other regulatory agency related problem.


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