M&A Due Diligence Process
M &A due diligence after the acceptance of an offer allows the buyer to ensure that the way the business has been portrayed is truthful and that the buyer has not missed pertinent information. During due diligence, the buyer’s team will closely review everything from your client’s financial information to operations and marketing.
The buyer will request information through the M&A advisor. Supplying all information in a timely manner will keep the due diligence process as short as possible. The advisor should have helped your client compile the required information throughout the time they have been working together.
During the M&A due diligence process it’s important that your client remembers to continue to focus on running the business. Now is not the time to let sales fall!
I recommend that clients avoid making major changes in the business at this time, especially without discussing them with the buyer. And if something negative unexpectedly happens, such as the loss of a major customer, it is important that your client, through the M&A advisor, inform the buyer immediately and take action to remedy the situation.
Due Diligence Requirements
The information the buyer will request during the due diligence process for acquisition will vary—it depends on the company and the buyer. Buyers get the bulk of the information required from a secure data room.The items listed below will give you an idea of the types of materials your client will need to produce and where you may be able to help:
- Articles of incorporation
- Licenses, permits, and regulatory approvals
- Information about all shareholders
- List of all customers and a breakdown by sales and products/services
- List of major suppliers
- Detailed list of employees
- Contracts with customers, suppliers, employees, and consultants
- Detailed list of fixed assets
- Detailed inventory list
- Details about warranty and rebate programs
- All financial and tax information
- Marketing material
- Details of marketing program
- Resumés of key employees
- History of worker’s compensation and unemployment insurance claims
- List of employee issues such as labour disputes or harassment claims
- List of employee benefits programs
- Copies of health and safety programs
- Copies of environmental reviews and approvals
- Insurance policies and list of claims
- Litigation information