Operational Due Diligence Playbook
Before closing, you want to ensure your business plan is achievable with your and your target’s existing operational facilities. Utilize our diligence template to review the business model and operations of your target to confirm it is a good fit. Book a playbook demo to explore — schedule a call with us and we will reach out to help you get started.
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What Tasks does the
Operational Due Diligence Playbook
Include
Organizational Structure
- 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
- 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
Staff Information
- 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
Governance of the Company
- 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
- 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
- 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
- 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
- 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?
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.
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
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.
Download your free template by simply filling out the form below.
Operational Due Diligence Playbook
Before closing, you want to ensure your business plan is achievable with your and your target’s existing operational facilities. Utilize our diligence template to review the business model and operations of your target to confirm it is a good fit. Book a playbook demo to explore — schedule a call with us and we will reach out to help you get started.
Operational Due Diligence Playbook
Before closing, you want to ensure your business plan is achievable with your and your target’s existing operational facilities. Utilize our diligence template to review the business model and operations of your target to confirm it is a good fit. Book a playbook demo to explore — schedule a call with us and we will reach out to help you get started.
Utilizing a checklist is just step one. In order to have a seamless process, M&A checklists need to be utilized with the proper deal workflow tool.
Request a demo to learn how you can turn a checklist into an automated process and workflow with the DealRoom platform. With DealRoom, you can tackle any type of due diligence.
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
Prepare for your operational due diligence
DealRoom’s operational diligence template is designed to help teams have an efficient due diligence process from the beginning. By providing your team with a pre-made professional diligence checklist, you can get a jump start on fulfilling diligence requests.
The template can act as a guide for common diligence requests categories such as the organizational structure, insurance, staff information, policies items for audit and more. And when you use a diligence tracker inside DealRoom, everything will be in one centralized space.
Organizational Structure
- 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
- 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
Staff Information
- 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
Governance of the Company
- 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
- 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
- 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
- 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
- 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
How DealRoom can help you execute due diligence
By using our master due diligence template, alongside DealRoom’s M&A lifecycle management software, you can create a smooth diligence process.
How DealRoom can help you execute integration
By using our integration template, alongside DealRoom's M&A lifecycle management software, you can create a smooth integration process
With this solution you’ll receive:
Professional template
A built-in data room
Project management capabilities
Collaboration tools
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