A due diligence checklist is a crucial part of the M&A process. It helps acquirers avoid costly and time-consuming surprises by uncovering the liabilities of a company, insecure contracts, intellectual property concerns, litigation risks, and more. It helps them determine the right deal for them from a cultural perspective.
Making a Due Diligence questionnaire (DDQ) is an intimidating task, especially for small-sized business owners who have never ever created one before. It is important to be thorough, but not so much that the company cannot respond.
While the list of documents that can be requested is lengthy and diverse, a few fundamental requirements are generally included. Included are three to five years’ worth of financial reports, tax returns as well as employment contracts, insurance policies and copies of the operating agreement or bylaws.
Implementing these measures can help make the DDQ process more efficient for both the buyer and the seller. Additionally, it will reduce the chance of sharing sensitive information without appropriate security measures in place.
The due diligence process may be a stressful process, but with proper planning it can be made as easy as possible. Your M&A advisor can assist you in identifying documents that buyers are likely to need. Prepare these documents ahead of time to ensure that the sale process can go ahead quickly. Contact the team at Allan Taylor & Co today for more information on how to prepare your company for the sale process to be successful.