Operational Due Diligence Checklist

When planning an acquisition procedure, investors and businesses need to be informed on the operational structure the target company is undertaking. This checklist breaks down the necessary categories to investigate.

Operational Due Diligence Template

Investors and businesses planning on entering an acquisition procedure to purchase another company need to be informed on facts focused on the operational structure and measures that the target company is undertaking.

This operational information can be divided into several important business categories that Operational Due Diligence is focused on investigating:

Financial review of the company
Review of the target company’s strategies and plans
Operational observation
Identification of operational risks and faults
Improved operational strategy plan
Communication regarding conducted Due Diligence and future improvement consideration

Daily Activities of Operational Due Diligence

The estimated duration of Operational Due Diligence when you are purchasing a company is 5-10 days, during which all of the following should be requested:

On-Site visitation and estimation of the company organization
Basic business information and routines (to be supplied to your evaluator for estimation)
Financial documents for the last 5 years
Strategic documents for the last 5 years
Executive leadership review of the company
On-Site operational investigation to be conducted in duration of at least 3 days
Review of capacity studies and manufacturing processes of the target company
An Operational Due Diligence Package (to be created by your consultant or evaluator)
The scheduling of a communication meeting (after the creation of the operational due diligence package) for both sides to agree on the Due Diligence results

Start Due Diligence With DealRoom

Start Integration With DealRoom

Operational Due Diligence Template

This operational information can be divided into several important business categories that Operational Due Diligence is focused on investigating:

Financial review of the company
Review of the target company’s strategies and plans
Operational observation
Identification of operational risks and faults
Improved operational strategy plan
Communication regarding conducted Due Diligence and future improvement consideration

Daily Activities of Operational Due Diligence

The estimated duration of Operational Due Diligence when you are purchasing a company is 5-10 days, during which all of the following should be requested:

On-Site visitation and estimation of the company organization
Basic business information and routines (to be supplied to your evaluator for estimation)
Financial documents for the last 5 years
Strategic documents for the last 5 years
Executive leadership review of the company
On-Site operational investigation to be conducted in duration of at least 3 days
Review of capacity studies and manufacturing processes of the target company
An Operational Due Diligence Package (to be created by your consultant or evaluator)
The scheduling of a communication meeting (after the creation of the operational due diligence package) for both sides to agree on the Due Diligence results

Operational Due Diligence Checklist

Start Due Diligence With DealRoom

Start Integration With DealRoom

What are the benefits of using this template?

Excel Export/Import

Export this template to Excel with just one click. Also, Import your Excel spreadsheet easily - turn it into a nice dealroom.net board.

Integrated with Data Room

The tasks tracker is integrated with the virtual data room, so you can start collecting documents right away.

Easy Tracking

Track your projects progress from start to finish, know if a task is stuck or behind schedule.

Eliminate Excel trackers, emails and disconnected tools with DealRoom

Due Diligence

Operational Due Diligence Template

This operational information can be divided into several important business categories that Operational Due Diligence is focused on investigating:

Financial review of the company
Review of the target company’s strategies and plans
Operational observation
Identification of operational risks and faults
Improved operational strategy plan
Communication regarding conducted Due Diligence and future improvement consideration

Daily Activities of Operational Due Diligence

The estimated duration of Operational Due Diligence when you are purchasing a company is 5-10 days, during which all of the following should be requested:

On-Site visitation and estimation of the company organization
Basic business information and routines (to be supplied to your evaluator for estimation)
Financial documents for the last 5 years
Strategic documents for the last 5 years
Executive leadership review of the company
On-Site operational investigation to be conducted in duration of at least 3 days
Review of capacity studies and manufacturing processes of the target company
An Operational Due Diligence Package (to be created by your consultant or evaluator)
The scheduling of a communication meeting (after the creation of the operational due diligence package) for both sides to agree on the Due Diligence results

What Tasks does the

Operational Due Diligence Checklist

Include

Organizational Structure

The first and most important information regarding the company you are targeting needs to contain organization data in terms of how the entire company works and specifically what assignments are required from each member of personnel.

The target company needs to supply a review report for the last 5 years if such reports were conducted
The target company is obligated to describe the current ownership construction of the company
If the owners are legal entities, additional information regarding beneficial ownership is required
The target company should supply records of how long has the company been involved in the current business
If during the last 5 years a corporate structure of the company has been changed, the additional operational report is required about these changes
The target company is obligated to provide copies of any previous operational and financial audits of the company if conducted in the last 3 years
Copies of all the previous annual reports of the company are required
Organizational structure diagram of the company needs to be provided, showing all of the key personnel for specific business areas
Total number of the company’s CEO’s
Total number of the company's employees and staff

Insurance Relevant Items Needed

This category should contain all of the company’s insurance types and information.

Copies of insurance policies
Provider details
Fidelity insurance policy
Fraud and computer crime policy
Workers compensation policies
Any insurance claims present over the past 5 years

Needed Items Regarding Staff of the Target Company

This category explains which reports and reviews you should acquire from the target company based on its staff and its workforce.

Current personnel information about previous employments and interests
Skills, experience, and length of service information of the employees
HR staff reports and information about the area of expertise and key responsibilities in the company
Report on the recruitment process and matters
An overview of staff training and developments as well as how these activities occur within the target company
Criteria used for personal worker assessment
Annual leave policy
What has been the turnover rate among the employees of the company?
Employee turnover rate for the last 3 years
Background check policy and reference check procedures

Items Regarding Governance of the Company

This category is focused on getting all the information regarding leaders of the company as well as its board members.

Total number of board members of the company as well as relevant details regarding the board
Overview of the full responsibilities of the board members
Overview of all Board Sub-Committees and the crucial management committees within the governance structure
Description of the corporate governance framework as well as a diagram presentation of a governance structure of the target company
An illustration of board committees

Policies Items for Audit

This category contains instructions about how the company’s policies should be organized.

Copies of the applicable policies (which are required for audit)
Beneficial policies review
Fraud and corruption policies review
Privacy policies, including client confidentiality
Risk management policies
Investment allocation policies
Conflicts of interests policies and counterparty exposure monitoring

Risk Handling Items Required

This part describes how a normal risk-free company should be established.

Ask to be provided with the Risk Register if the target company has it in place
Selling side needs to provide you with the overview and team structure of the Risk Management Team
Ask to be supplied with the brief Risk Management Framework, which each company should have established
Find out who is responsible for the maintenance of the Risk Register
Ask to be provided with the details of how the company copes with external risk matters
Find out how the target addresses the issue of operational risk
The target company is obligated to provide you with the details on who maintains and owns the authorized signatory list for the company

Pre-Acquisition Compliance Items

Additional list of the last steps of due diligence to be conducted before the acquisition.

Ask to be supplied with information about the process for the setup of pre-trade compliance rules
Ask for the description of the process to override any breaches as part of the pre-trade compliance - note: you are obligated to have confirmation that the pre-trade compliance processes exist
Ask the target company to provide you with the workflow process for the handling of compliance rule breaches

Other

As the finishing touch of Operational Due Diligence, a few additional points need to be investigated and secured before the acquisition process begins:

‍

A review of cash flow management
An OTC derivative system usage review
A review of administration and cash reconciliation of internal records
An established daily post-trade compliance for your newly purchased company

FAQ

What Is Due Diligence?

Due diligence is a critical aspect of any deal that begins very early in the process and can continue right up until closing. During due diligence, the potential buyer asks questions and requests documentation from the seller that helps the buyer understand the target company and its business. These requests are usually general to start and become more specific as the buyer develops a greater understanding of the target. Buyers use the information provided by the seller to evaluate the opportunities and risks associated with the potential transaction. It is important for sellers to stay organized throughout the process. Buyers often submit thorough, detailed request lists that require input from numerous members of the seller’s deal team.

What is a due diligence checklist?

As the name implies, a due diligence request list is a list of questions and requests for information and documentation that a buyer submits to a seller in order to learn about the target company, its business and its operations. The initial diligence request list tends to be broad and typically includes an extensive list of questions covering a wide range of subjects. This allows the buyer to gain a broad understanding of the target company and identify key issues that can be investigated and considered more closely. Because every deal is different, due diligence request lists have to be tailored to meet the needs of the buyer and address the unique circumstances of your transaction.
However, there is a variety of fundamental requests that are relevant in most deals. These are the types of requests that our templates are designed to address.

What Questions Does the Master Due Diligence Questionnaire Include?

Key considerations when using our m&a due diligence template

Our templates are drafted to provide an inclusive and wide-ranging list of initial due diligence requests. However, the templates, as well as the information contained therein, are not legal advice. They are not complete, and they are not specific to your transaction. The templates are designed to elicit general information from the seller that will provide the buyer with a broad overview of the target and it’s business and operations. You should review any template before using it, and it may need to be modified to ensure that it is suitable and relevant to your circumstances. Information provided by the seller will likely trigger additional questions that focus on specific aspects of the target’s business and issues identified during the due diligence process.

Are the requests in the template comprehensive?

No. Our Due Diligence Checklist is drafted to include typical requests that are relevant in most transactions. However, every deal and every target company is unique. Before utilizing any template, it is important that you review it with the help of your legal and other professional advisors to ensure that the requests are complete and tailored to the specific circumstances of your deal.

How to use the template with Dealroom

Start 14-day Free Trial of DealRoom and sign-up
Select a Master Due Diligence Template while creating a new room
Start assigning, adding to, and completing due diligence requests with needed documents by uploading them into the built-in virtual data room. The Requests tab is automatically populated with the requests from the due diligence template.

Can I change requests in this checklist or add new?

Every M&A 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 integration information?

This checklist was created by and for M&A professionals. It includes a comprehensive starting point for the integration process. However, every deal is different and may require additional requirements and tasks.

How to use this template with DealRoom?

Start 14-day Free Trial of DealRoom and sign-up
Select an Integration Template while creating a new workspace
Start planning, assigning, adding to, and completing integration tasks. The Requests tab is automatically populated with the tasks from the integration template.

Key considerations when using our m&a due diligence template

Are the requests in the template comprehensive?

How to use the template with Dealroom

Start 14-day Free Trial of DealRoom and sign-up
Select a Master Due Diligence Template while creating a new room
Start assigning, adding to, and completing due diligence requests with needed documents by uploading them into the built-in virtual data room. The Requests tab is automatically populated with the requests from the due diligence template.