The following due diligence checklist provides an organized way to learn about a company's assets, liabilities, contracts, potential problems, and risks. This is a partial list and is not intended to be so comprehensive that it covers every type of business and every situation.

Sometimes due diligence will involve a feasibility study. A feasibility study is a comprehensive analysis assessing a proposed project's practicality, viability, and potential for success before significant investment, examining factors like technical, economic, legal, operational, and market aspects to help stakeholders decide whether to proceed, modify, or abandon the idea. It identifies strengths, weaknesses, opportunities, and risks, providing data for informed decisions on whether a project is a worthwhile use of time and resources.

 

1. Organization

• The Company's Articles of Incorporation, including any amendments
• The Company's Bylaws and any amendments
• The Company's minute book, including all minutes and resolutions of shareholders, directors, and executive committees
• The Company's organizational chart
• The Company's list of shareholders and the number of shares owned by each
• Copies of agreements relating to options, voting trusts, and warrants
• A Certificate of Good Standing from the Secretary of State
• A list of all states where the Company is authorized to do business
• A list of all states where the Company owns or leases property, has employees, or conducts business.
• A list of all of the Company's fictitious business name.

2. Financial Information

• Audited financial statements for the last three years, together with any auditor's reports
• The most recent unaudited financial statements, with comparable statements to the prior year.
• Auditor's letters and replies for the past five years
• Any budgets, and strategic plans.
• A schedule of all indebtedness and contingent liabilities
• A schedule of inventory
• A schedule of accounts receivable
• A schedule of accounts payable
• A description of depreciation and amortization methods and changes in accounting methods over the past five years
• The Company's general ledger
• A description of the Company's internal control procedures

3. Real Estate

• A schedule of the Company's business locations
• Copies of all real estate leases, mortgages, title policies, surveys, zoning approvals, variances, and use permits.

4. Other Assets

• A schedule of fixed assets and the locations
• All U.C.C. filings
• All leases of equipment
• A schedule of sales and purchases of major capital equipment during the last three years

5. Intellectual Property

• A schedule of domestic and foreign patents
• A schedule of trademarks and trade names
• A schedule of copyrights
• A description of methods used to protect trade secrets and knowledge.
• A schedule and copies of all consulting agreements, agreements regarding inventions, and licenses or assignments of intellectual property to or from the Company
• A schedule and summary of any claims or threatened claims by or against the Company regarding intellectual property.

6. Employees and Employee Benefits

• A list of employees including positions, current salaries, and bonuses paid during the last three years
• All employment, consulting, nondisclosure, and no solicitation or noncompetition agreements between the Company and any of its employees.
• Resumes of key employees
• The Company's personnel handbook and a schedule of all employee benefits and holiday, vacation, and sick leave policies.
• Summary plan descriptions of qualified and non-qualified retirement plans
• Copies of collective bargaining agreements, if any.
• A description of all employee complaints within the last three years, including alleged wrongful termination, harassment, and discrimination complaints.
• A description of any labor disputes, requests for arbitration, or grievance procedures currently pending or settled within the last three years.
• A list and description of benefits of all employee health and welfare insurance policies or self-funded arrangements.
• A description of the worker's compensation claim history
• A description of unemployment insurance claims history
• Copies of all stock option and stock purchase plans and a schedule of grants thereunder

7. Licenses and Permits

• Copies of any governmental licenses, permits or consents
• Any correspondence or documents relating to any proceedings of any regulatory agency.

8. Environmental Issues

• Environmental audits, if any, for each property leased by the Company.
• A listing of hazardous substances used in the Company's operations, if any.
• A list of environmental permits and licenses
• Copies of all correspondence, notices, and files related to EPA, state, or local regulatory agencies
• A list identifying and describing any environmental litigation or investigations
• A list identifying and describing any known superfund exposure
• A list identifying and describing any contingent environmental liabilities or continuing indemnification obligations

9. Taxes and Tax Returns

• Federal, state, local, and foreign income tax returns for the last three years
• State sales tax returns for the last three years
• Any audit and revenue agency reports
• Any tax settlement documents for the last three years
• Employment tax filings for the last three years
• Excise tax filings for the last three years
• Any tax liens

10. Contracts

• A schedule of all subsidiary, partnership, or joint venture relationships and obligations, with copies of all related agreements.
• Copies of all contracts between the Company and any officers, directors, five percent shareholders or affiliates.
• All loan agreements, bank financing arrangements, lines of credit, or promissory notes to which the Company is a party.
• All security agreements, mortgages, indentures, collateral pledges, and similar agreements.
• All guarantees to which the Company is a party
• Any installment sale agreements
• Any distribution agreements, sales representative agreements, marketing agreements, and supply agreements.
• Any letters of intent, contracts, and closing transcripts from any mergers, acquisitions, or divestitures within the last five years.
• Any options and stock purchase agreements involving interests in other companies
• The Company's standard quote, purchase order, invoice, and warranty forms.
• All nondisclosure or noncompetition agreements to which the Company is a party.