Due Diligence Checklists & Reports
Take advantage of a secure digital auditing tool for convenient due diligence—legal, financial, and more.
Take advantage of a secure digital auditing tool for convenient due diligence—legal, financial, and more.
Published 27 Jul 2021
A due diligence checklist is a tool used by investors, business owners, and consultants in analyzing a company that they’re acquiring through either a sale, merger, or other methods. Also referred to as a due diligence checklist for acquisition, due diligence checklists help ensure that the final decision is based on a thorough investigation of all aspects of the business, uncovering red flags and determining if the current value of a company makes it a wise investment.
A due diligence checklist can be used as a guide in conducting an analysis on a company with potential for investment. Use this due diligence checklist to determine profitability and risk during the decision-making process before a merger or acquisition. This converted checklist can be used by investors and consultants on their mobile device to do the following when doing due diligence:
Investors and consultants need to review key aspects of a business to determine if it will be worth the investment and find red flags that may negatively impact profitability. Here are some of the key aspects to look into and some key due diligence questions to ask:
Is the business in compliance with legal requirements? Is the company open to sharing requested company information or were there reservations?
What is the business selling? Do the products and services meet required certification and legal criteria? How about the product development and manufacturing processes?
Review all financial records, including all debts acquired and taxes paid. Check for compelling reasons to investigate further and be wary of how the company manages its finances. Does the company exhibit transparency in providing access to financial records?
How are employees treated? How competitive is the employee benefit package? Is there a history of legal action initiated by or against employees? What is the professional history and reputation of the key executives?
Public perception can impact profitability. Find out what the media, competitors, and the target market has to say about the business. How is the business’ corporate social responsibility? Any legal issues or environmental concerns raised against the company? What is the company’s overall reputation in the industry?
There are three main types of due diligence, these are: 1) Legal, 2) Financial, and 3) Commercial. All three types help contribute in providing the right information thoroughly assessing the company of interest’s business, assets, capabilities, and financial performance.
Legal due diligence is the examination and review of legal documents and contracts. A legal due diligence checklist includes exploring areas such as:
Financial due diligence focuses on verifying and evaluation of financial records of the target company. A financial due diligence checklist covers areas such as:
Commercial due diligence is the thorough understanding and examination of the market that the target company operates in. A commercial due diligence checklist involves activities such as conversing with customers, assessment of competitors and an analysis of the business plan.
Due diligence documents, or due diligence forms, are records, reports, or other documents that helps verify and corroborate the due diligence process. Below are selected documents from each type of due diligence according to a non-exhaustive list made by an industry leader on research, benchmarking, and performance:
Click here to view the complete Due Diligence Documents Checklist
A due diligence report is a summary of the findings from the entire due diligence process completed by the company’s internal team or a paid third-party group. Reporting about due diligence can seem a daunting task, but it can help to do a breakdown of the reports according to the type of due diligence or highlight red flags like the due diligence report example below:
Due Diligence Sample Report
Click here to view the complete Due Diligence PDF
Conducting due diligence to assess the viability of businesses for investment, mergers, and acquisitions entails going through a lot of company records in as little time as possible. iAuditor by SafetyCulture can help business owners and consultants conduct effective due diligence by providing the following benefits.
A due diligence documents checklist is a tool used to make sure that the company’s internal due diligence team or a paid third-party group can look into the required and relevant records to help investors come up with an evidence-based decision for acquisitions or mergers. This checklist is converted into a digital template which you can easily customize with the iAuditor drag-and-drop template editor to fit your business needs.
A legal due diligence checklist is used by lawyers or legal advisors as a guide to check all legal documents and contracts for risks that may be hidden in legalese and uncover possible legal obligations.
A financial due diligence checklist is used as a guide to review the assets & liabilities and financial risks of a business. This financial due diligence checklist can be used by accountants or financial advisors to assess the financial standing of a business.
An operational due diligence template is used to review the operations of a business: customer patterns, competitors, marketing, and perception. This converted operational due diligence checklist uses the response set Done-In Progress-Not Applicable for each item.
A technical due diligence, sometimes called an IT due diligence, helps IT managers check all essential Information Technology assets of a business during mergers and acquisitions. This is crucial for streamlining the management of IT assets and processes. iAuditor digital checklists can be customized to fit business needs.
