The Private Equity Due Diligence Checklist provides a framework of initial due diligence requests. These are tailored specifically to transactions involving private equities or privately-owned companies.
Understanding the target company and its business model is the foundational phase of the diligence process. It helps you glean an over-arching understanding of their potential investment. Data required ranges from general information about the company and their culture to conducting more in-depth surveys on internal processes.
ITEMS IN COMPANY/BUSINESS MODEL DUE DILIGENCE INCLUDE:
Legal/IP due diligence helps you deduce whether the target company is sound and complaint or riddled with statutory issues. Additionally, evaluating the target company’s intellectual property (IP) will aid in estimating overall business value. Information required often include various contracts, IP documentation, litigations, and licenses and permits.
ITEMS IN LEGAL/IP DUE DILIGENCE INCLUDE:
Auditing the target company’s financial situation is an integral factor in valuing a company. Financial due diligence brings validity to the confidential information memorandum (CIM) and helps forecast potential financial risks. The documents required include audited/unaudited financial statements, tax documents, sales projections, and long-term debt agreements.
ITEMS IN FINANCIAL DUE DILIGENCE INCLUDE:
Human resources play a key role in an integration’s ultimate success. Examining HR practices and the target company’s people will help you understand the company culture, procedures, and indispensable personnel. Information collected org charts, benefits and compensation packages, employee contracts, and performance appraisals.
ITEMS IN HR DUE DILIGENCE INCLUDE:
A company’s intangibles can be a costly investment. Appraising a company's property, plants, and equipment will help safeguard against unforeseen expenses for faulty assets. Data required includes asset policies, depreciation methods, and physical inspections.
ITEMS IN PROPERTY, PLANT, AND EQUIPMENT DUE DILIGENCE INCLUDE:
Hidden environmental and safety liabilities can result in thousands of lawsuits and fines. Verifying the target company’s compliance will protect against headaches and unnecessary expenditures down the line. Documents required include accident histories and material safety data sheets.
ITEMS IN ENVIRONMENTAL DUE DILIGENCE INCLUDE:
After investing in a company, it would be devastating to find out their product, service, or idea is a complete flop. Evaluating the company’s market and competitive scape offers insight on the investment’s viability and long-term success. Items required include information on the current market, risks, trends, and competitors.
ITEMS IN MARKET/COMPETITION DUE DILIGENCE INCLUDE:
This private equity 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.
This private equity fund due diligence template may be used as simply the downloadable Excel sheet. However, it operates most efficiently when utilized in conjunction with DealRoom’s dynamic due diligence tool. We offer a secure space to conveniently request, collect, and house data. Additionally, DealRoom offers numerous capabilities and security features to streamline the process and ultimately close deals faster.