A due diligence check list is a crucial part of the M&A procedure. It can help acquirers avoid costly and time-consuming surprises by uncovering a business’s liabilities, problematic contracts intellectual property concerns, litigation risks and much more. It also assists them in determining whether a deal is an appropriate fit from a culture perspective.
Creating a due diligence questionnaire (DDQ) isn’t easy especially for small-sized businesses who have never had one before. It is important to be thorough, but not to the point that the company cannot respond.
The list of documents that are required may be lengthy, but there are some basic demands that are always included. Included are three to five years’ worth of financial reports, tax returns, 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 seller. Additionally, it will reduce the risk of sensitive information being shared without appropriate security measures in place.
The process of due diligence can be stressful but with the proper planning it can be made as simple as it is possible. Your M&A advisor will assist you with identifying the documents that buyers are likely to request. Prepare these documents ahead of time to ensure that the sale process can be completed quickly. Contact the team at Allan Taylor & Co today to learn more about how to prepare your company for an efficient sales process.
