Creating a Due Diligence Checklist

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A due diligence checklist is an essential element of the M&A process. It assists acquirers in avoiding costly and time-consuming surprises by uncovering the business’s liabilities, troublesome contracts, intellectual property concerns, litigation risks and much more. It assists them in determining whether a deal is appropriate for them from a cultural perspective.

Creating a Due Diligence Questionnaire (DDQ) is an overwhelming task, particularly for small business owners who have never had the opportunity to create one before. It is important to be thorough but not so much that the business is unable to respond.

While the list of documents that can be requested is broad and diverse, some basic requirements are typically included. Included are three to five years’ worth of tax returns, financial reports and employment contracts, insurance policies and copies of the operating agreement or bylaws.

Having these in place can aid in making the DDQ process more efficient for both the buyer and seller. Additionally, it can reduce the chance of sensitive information being shared without the proper security measures in place.

The due diligence process may be stressful but with the proper planning, it can be made as easy as possible. Talk to your M&A advisor to identify the items that buyers are likely to want and ensure that the documents are prepared before the sale process can proceed quickly. Contact the team at Allan Taylor & Co today to learn more about how to prepare your company for an efficient sales process.

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