Due diligence checklist for merger & acquisition

Written by natalia pena
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Due diligence checklist for merger & acquisition
Checklist (checklist of the public health service image by Alexey Klementiev from Fotolia.com)

Due diligence is the practice of analysing and researching a company or an organisation prior to a business transaction taking place. Compiling a due diligence checklist is a resourceful tool when undergoing a merger and acquisition. The checklist assists in covering all business components to ensure that a proper investigation is performed in order to prevent any delays or complications for the involved parties.

Agreements with Customers and Clients

Customer and client agreements are binding contracts signed between two parties to ensure the proper delivery of a product or service over a specific duration of time. When conducting a merger and acquisition, it's an important item to place on a checklist since the company can he held liable to carry out the remainder of contractual agreements such as warranties, guarantees and license agreements.

Product and Operating Expenses

Product and operating expenses is a valuable item to have on a merger and acquisition due diligence checklist. A detailed record should be obtained of operating and product expenses for the previous financial years, such as outside contractor information, administrative and payroll expenses. The records are necessary in order to research future budgeting, operation and developmental expenditures.

Tax Information and History

A very import element of the checklist should include a portion designated for tax information. Researching a company's tax history is a crucial part of a merger and acquisition, since any outstanding balances can be a liability. It is very important to have a record of a company's current tax history that dates back to the previous 5 years for their revenue, property, returns, payroll, examination and audit information.

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