What Tasks Does the Legal Due Diligence Checklist Include
ITEMS IN GENERAL LEGAL DUE DILIGENCE INCLUDE:
- Copies of agreements or instruments that place restrictions or encumbrances on assets.
- Contracts that restrict the target's right to conduct its business.
- Contracts with obligations such as covenants and indemnification.
- Summary of the target's compliance program and copies of all policies, procedures and other related documentation.
- Confirm that the firm is not restricted from doing business under OFAC regulations or similar.
- Confirm whether the target has any direct or indirect presence and/or other engagements.
- Summary of regulations applicable and/or its business, and anticipated changes
- Copies of any letters with any regulatory agencies or authorities.
- List of states and countries in which the target has operations.
- Good-standing certificates or qualification to do business from state of incorporation and states where qualified.
- Schedule of any significant U.S. import or export restrictions that relate to the target's operations.
ITEMS IN ORGANIZATION/OWNERSHIP DUE DILIGENCE INCLUDE:
- List of current shareholders detailing the amount of shares each owns.
- List of stock transfer records.
- List of stock broker contracts and agreements.
- Evidence that outstanding stock is paid in full.
- Identify issues associated with transfering equity.
ITEMS IN LITIGATION DUE DILIGENCE INCLUDE:
- List of all threatened, pending, current, and closed litigations from the past five years.
- List of arbitrational procedings from the past five years.
- Summaries of current and closed governmental investigations and proceedings on the target, directors, and executives from the past five years.
- Responses from the company regarding audit inquires.
- List of all statutory orders, decrees, and rulings to which the company be subject.
ITEMS IN PRODUCT/SERVICE DUE DILIGENCE INCLUDE:
- Detailed list of all products and services.
- Verify compliance with FDA, CPSC, OSHA, and FLSA regulations for products, services, and operations.
- Copies of all product warranties.
- Summary of all material warranty claims brought.
- Summary of all product recalls.
- Identify potential liabilities associated with products/services.
ITEMS IN CONTACTS/OBLIGATIONS DUE DILIGENCE INCLUDE:
- Copies of service contracts.
- Copies of vendor contacts.
- Copies of customer contracts and obligations.
- Copies of outstanding contracts to purchase machinery or real estate.
- Copies of contracts for construction, architectural or engineering services for any buildings or improvements.
- Copies of operating contracts.
- Copies of employee contracts and retirement agreements.
- Change of control regulations.
- Copies of material contracts that are terminable upon a change of control or other corporate transaction.
- Copies of all joint venture, partnership, and franchise agreements.
- Identify any contracts or provisions that may be out of the ordinary course of business.
ITEMS IN PERMITS/LICENSES DUE DILIGENCE INCLUDE:
- Summary of permits, licenses, and other authorizations including any required export control and pertinent governmental licenses.
- Summary of icense, sublicense, royalty and franchise agreements.
- Schedule of permit and license renewals and associated fees.
- Copies of automobile registrations.
ITEMS IN INTELLECTUAL PROPERTY DUE DILIGENCE INCLUDE:
- List of all patents, trademarks, trade-names, service marks and copyrights held or applied for.
- List of the creator(s) for each IP component.
- List of all patents, trademarks, and copyrights held by an employee, shareholder, director or any other affliated that are used by the target.
- Summary of material trade secrets.
ITEMS IN HR/OPERATIONS DUE DILIGENCE INCLUDE:
- List of all employees including those covered by any disability legislature in the company.
- List of OSHA citations, employee health issues related to the target, and any other adverse environmental or occupational safety or health condition or concerns.
- History of all sexual harassments accusations, charges, and convictions from the past five years.
- Copies of all current employment applications, interview guides, and hiring procedures.
- Verify compliance with equal employment opportunity and anti-discrimination legislature.
- Summaries of disciplinary and termination procedures and all involuntary employee terminations from the past five years.
- History of Unemployment and Worker’s Compensation claims.
- Verify compliance with Fair Labor Standards Act, i.e. minimum wage, child labor, etc. (if U.S. based).
- Ensure employee personnel files and Form I-9s (if it is United States-based company) are in compliance with legal standards.
- Copies of all SBCs for current benefit plans.
- Copies of all union and labor contracts.
- History of labor-related disputes, grievance procedings, and arbitrations.
ITEMS IN ENVIRONMENTAL DUE DILIGENCE INCLUDE:
- Environmental inspection or review of all facilities.
- Copies of all regulatory notices, complaints, and correspondence.
- Past or current litgations and procedings regarding environmental concerns.
- Survey condition of neighboring areas to the target's facilities.
- Describe waste disposal processes.
- Describe the existence, condition, and handling of controlled or hazardous substances such as asbestos, radioactive materials, and pesticies.
- Verify compliance with governmental regulations.
Can I change requests in this checklist or add new?
Every M&A and due diligence process is different. Downloaders are urged to make these checklists their own by changing the providing information to better fit their needs.
Does this questionnaire provide all the necessary due diligence information?
This legal due diligence questionnaire was created by and for M&A professionals and includes a comprehensive starting point for any diligence process. Every deal is different however and may require additional requests or diligence areas.
Easily Collect Data Using this Due Diligence Template in DealRoom
This legal due diligence template can be easily downloaded and utilized as just the Excel sheet. However, it is most effective when paired with DealRoom’s dynamic due diligence software. We offer a secure space to conveniently request, collect, and house data. Additionally, DealRoom offers analytics, security features, and customized help to streamline the process. We are confident that with DealRoom you can close deals up to 40% faster.
How to use the template with DealRoom:
Download the due diligence template from DealRoom’s website
Open a room within DealRoom
Go to the Requests tab and select “import”
Import the downloaded template
The Requests tab is automatically populated with the requests from the due diligence template. Users can begin assigning, adding to, and completing due diligence requests.