A Purchasers Due Diligence Checklist - Buying a Business
In order to properly assess the value of a target business, a purchaser should dedicate the necessary time and resources in conducting an exhaustive due diligence inquiry.
by William A. Rearden
March 12, 2010
In order to properly assess the value of a target business, including all potential losses and liabilities involved in acquiring the business, a purchaser should dedicate the necessary time and resources in conducting an exhaustive due diligence inquiry. This bulletin provides an abbreviated checklist that may provide the basis for an expanded and customized investigation.
- Basic Organizational Documents.
- Copies of certificate of good standing, and articles of incorporation (or organization) and amendments
- Copies of the bylaws (or operating agreement) and amendments
- Copies of the minutes of shareholder and director meetings
- Stock (or unit) ledger
- The purchaser should request and review each of these documents for each of the target’s subsidiaries as well
- Real Property.
- Schedule describing each parcel of real property owned by the target
- Copies of all deeds and leases
- Copies of all title reports, abstracts, opinions, insurance polices and surveys
- Copies of all mortgage and lien or encumbrance documents
- Personal Property.
- Schedule of all personal property leased or owned
- Copies of all personal property leases
- Copies of all documents evidencing security interests in the target’s personal property
- Legal Proceedings.
- Schedule of all pending and threatened litigation or regulatory matters
- Copies of all pleadings and related documentation
- Environmental.
- Environmental audit or survey of the real property
- Copies of all documentation relating to EPA or local environmental regulatory matters concerning the real property
- Business Practices.
- Copies of form purchase orders and form service contracts
- Schedule describing the target’s relationship with major customers
- Copies of all materials contracts
- Labor and Employment.
- Copies of employee health, welfare and other benefit plans
- Copies of all documentation relating to any worker safety and health compliance matters
- Copies of employment contracts and consulting agreements
- Schedule of all wage and salary obligations of the target
- Intellectual Property.
- Copies of licensing agreements
- Copies of all copyright, trademark or patent registrations
To discuss a due diligence checklist that is more appropriate for your specific circumstances, please do not hesitate to contact an attorney in our Business & Tax Law Practice Area.