You’ve decided to acquire a business. One of your most important tasks during the transaction process will be to diligence that business.
Due diligence is the comprehensive appraisal of a business undertaken by a prospective buyer or investor before they sign the definitive agreement, and is usually done to lay out its assets and liabilities and evaluate its commercial potential. It should be performed before any major financial transaction including (but not limited to) mergers, acquisitions, equity investments, and debt investments.
However regardless of whether you’re a financial sponsor or strategic acquirer making an investment, or a business owner preparing materials for your own sale or fundraising, the due diligence process can be exceptionally complex. And while any due diligence process will be lengthy, none is more lengthy or complex than the kind that accompanies a merger, buyout, or acquisition.
We’ve decided to create this sample M&A due diligence checklist in order to guide you through your diligence process.
It was written for the acquirer in a standard M&A process, but is designed to act as a guide whether you’re an acquirer, investor, or advisor from the buyside, or an advisor or company owner raising funds or selling a business from the sellside.
It goes over a general list of items and documents to review and investigate. However not every question will be necessary for your acquisition or investment process, and, on the flipside, it’s not exhaustive (e.g., it doesn’t include every IT due diligence or values due diligence question). Specifically, you may want to add industry-specific questions for sizable acquisitions, while far fewer will be needed for asset purchases. Finally, it’s only a general guide, and should not be used as your sole resource in the process.