Due Diligence Checklist

A Due Diligence Checklist should be used when making preliminary enquiries as to whether or not you want to proceed with purchasing a company or business.  It is your responsibility  as the buyer to ensure that you are aware of any risks associated with buying a company or business.  You may discover after conducting due diligence that you do not want to buy the company or business.

Note this template Due Diligence Checklist is necessarily generic.  Each industry has its own particular features that may not be covered by this Due Diligence Checklist e.g. if the business is heavily technology-driven, more detailed investigations into the technology, its development and IP ownership may need to be made.  If there is anything that you would like to add or remove from the checklist, please discuss with your PTL lawyer.  

We recommend that you review all financial information, balance sheets and profit and loss statements with your accountant as well as the tax implications of the proposed transaction.

The Due Diligence Checklist covers the following areas (among other things):

1.     Corporate

• How is the company structured?
• Does it have any interests in other companies or entities?
• What is its shareholding?
• In what jurisdiction does the company operate?

2.     Assets

• What are the assets of the company?
• Are they owned or licensed?
• Are the titles in order and have the assets been independently valued?
• Are they subject to any encumbrances (e.g. a mortgage, charge or lien)?

3.     Contracts

• What are the material contracts?
• Are the processes for sales and marketing, production and/or delivery of the products/services to customers well documented?
• Are any contracts terminated as a result of the proposed sale?

4.     Licences

• Are there any specific licences, permits or special industry requirements for the business?

5.     Banking and Finance

• What is the profit margin?
• What are the company’s banking and other financial arrangements?
• What is the company’s level of debt?