Small Business Due Diligence Playbook
Overcome the challenges of diligence when acquiring a small business to expand your own. Feel confident approaching this crucial process with our pre-made professional diligence template. 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
Small Business Due Diligence Playbook
Include
Financial Information
- Copies of all financial business records for the previous 3 business years
- A report on the initial total company value, containing all financial assets, as well as products if the company has an official product for selling
- Copies of the bank reports on any existing credits with the total amount left to be paid
- A description of the internal company’s financial control methods, including the financial control role of the employees
- A list of the payable and receivable income and cash flow statements
- Copies of the company’s balance sheets for foreign and domestic accounts
- Copies of the reports regarding the tax returns conducted in the previous 3 business years
- A list of all debts of the company, if applicable, with the exact amount and terms for each
- Company’s general income amount accumulated in the last 3 business years
- General cost amounts of the company listed in the previous 3 business years
- Copies of the balance sheets providing information regarding the variable and fixed costs of the firm
- A detailed description of the company’s investment policies and procedures used in the previous 3 business years
- A list showing all the company’s accounting team members, with their personal information and the accounting methods used by each member
- Copies of all previously financial audits, if conducted, containing the information about each financial auditor responsible
Legal Information
- A list containing all of the previous and ongoing legal issues and litigations that could affect the business of the company, with the description for each litigation
- A description of all of the company’s legal advisors and representatives including personal information, number of cases won and lost, and an overview of their performance on the legal behalf of the company
- A list of all of the company’s insurances and methods, with a detailed description of each
- A list including all of the necessary licenses and permits that the company must have in order to continue doing business
- Licenses and permits regarding product placement rights as well as the selling of the official company’s product
- Legal confirmation of the company’s official trademark with the necessary information that proves the trademark’s originality
- A list of all of the company’s employee insurance policies and acquiring methods for all existing policies in use
- A list detailing the situations of all previous court processes of the company
- Legal confirmation of the company’s official patent rights, if the company has any, with detailed information on how the patent is being protected as a company’s property
Organizational and Operational Items
- A copy of the company’s Article of Incorporation with relevant documentation
- An organizational chart of the target company
- A list of all of the company’s bylaws and amendments
- Copies of all the necessary business licenses and permits issued by the state attorney of the states where the company is permitted to do business in
- A list of the company’s partners and business associates and information regarding their shares in the common businesses or target company’s business equipment usage
- Copies of the relevant documentation including the details regarding current company investors and shareholders
- A complete list of the business authorizations issued by the state secretary of foreign and domestic states where the company is permitted to do business in
- A description of protection methods used for securing the official company’s trademark, logo, official websites and domains of the company
- A list of all products and services offered by the targeted small business including the information regarding product costs and margins
- Registration details and conditions that the company must have fulfilled for being able to conduct business operations
- Business compliance programs and information relevant for the business of the company
- Description of all existing marketing plans
Material and Partnership Contracts
- Review if the company has existing loan agreements, credit or lease obligations, with the detailed information on each if your newly acquired business will have to deal with those items in the future
- A list of all nondisclosure or incomplete agreements that could be inherited to the future business of the company
- Invoices and warranties of the company’s purchase orders
- A list of all existing merger and acquisition contracts for review and verification
- Security agreements that are currently in use in the company
- Copies of all worker contracts for revision, containing the directors and manager contracts with all the crucial information
- Review all stock purchase contracts and agreement details included
Intellectual & Material Property
- A list containing information regarding all company’s material property such as business facilities, offices, vehicles and other relevant for business property
- A list showing number of offices and business equipment under rent or lease, as well as credit information if such an option was chosen for purchasing material property of the company
- Contract details regarding any credited or under loan material property including details information of the payment methods
- A complete list of the company’s intellectual property factors such as patents and trademarks including legal protection methods used for securing each of the items
- A description of the methods used for dealing with the intellectual property of the firm along with the information of responsible personnel
- Licenses and permits issued by the state secretary regarding material and intellectual property of the company and its protection
Employee & Board of Directors
- A complete list containing information regarding all current employees and Board of Directors of the small business targeted
- Information relevant for hiring active personnel of the firm
- A scheme diagram showing the duty delegation to every active employee member of the company and his/her obligations regarding such duties
- Description of methods used when calculating employee salary and bonuses
- A list of all employee-related insurances and bonuses currently applied in the company
- Employee motivation methods used in the company with a detailed description of each
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.
Small Business Due Diligence Playbook
Overcome the challenges of diligence when acquiring a small business to expand your own. Feel confident approaching this crucial process with our pre-made professional diligence template. Book a playbook demo to explore — schedule a call with us and we will reach out to help you get started.
Small Business Due Diligence Playbook
Overcome the challenges of diligence when acquiring a small business to expand your own. Feel confident approaching this crucial process with our pre-made professional diligence template. 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.
- Copies of all financial business records for the previous 3 business years
- A report on the initial total company value, containing all financial assets, as well as products if the company has an official product for selling
- Copies of the bank reports on any existing credits with the total amount left to be paid
- A description of the internal company’s financial control methods, including the financial control role of the employees
- A list of the payable and receivable income and cash flow statements
- Copies of the company’s balance sheets for foreign and domestic accounts
- Copies of the reports regarding the tax returns conducted in the previous 3 business years
- A list of all debts of the company, if applicable, with the exact amount and terms for each
- Company’s general income amount accumulated in the last 3 business years
- General cost amounts of the company listed in the previous 3 business years
- Copies of the balance sheets providing information regarding the variable and fixed costs of the firm
- A detailed description of the company’s investment policies and procedures used in the previous 3 business years
- A list showing all the company’s accounting team members, with their personal information and the accounting methods used by each member
- Copies of all previously financial audits, if conducted, containing the information about each financial auditor responsible
- A list containing all of the previous and ongoing legal issues and litigations that could affect the business of the company, with the description for each litigation
- A description of all of the company’s legal advisors and representatives including personal information, number of cases won and lost, and an overview of their performance on the legal behalf of the company
- A list of all of the company’s insurances and methods, with a detailed description of each
- A list including all of the necessary licenses and permits that the company must have in order to continue doing business
- Licenses and permits regarding product placement rights as well as the selling of the official company’s product
- Legal confirmation of the company’s official trademark with the necessary information that proves the trademark’s originality
- A list of all of the company’s employee insurance policies and acquiring methods for all existing policies in use
- A list detailing the situations of all previous court processes of the company
- Legal confirmation of the company’s official patent rights, if the company has any, with detailed information on how the patent is being protected as a company’s property
- A copy of the company’s Article of Incorporation with relevant documentation
- An organizational chart of the target company
- A list of all of the company’s bylaws and amendments
- Copies of all the necessary business licenses and permits issued by the state attorney of the states where the company is permitted to do business in
- A list of the company’s partners and business associates and information regarding their shares in the common businesses or target company’s business equipment usage
- Copies of the relevant documentation including the details regarding current company investors and shareholders
- A complete list of the business authorizations issued by the state secretary of foreign and domestic states where the company is permitted to do business in
- A description of protection methods used for securing the official company’s trademark, logo, official websites and domains of the company
- A list of all products and services offered by the targeted small business including the information regarding product costs and margins
- Registration details and conditions that the company must have fulfilled for being able to conduct business operations
- Business compliance programs and information relevant for the business of the company
- Description of all existing marketing plans
- Review if the company has existing loan agreements, credit or lease obligations, with the detailed information on each if your newly acquired business will have to deal with those items in the future
- A list of all nondisclosure or incomplete agreements that could be inherited to the future business of the company
- Invoices and warranties of the company’s purchase orders
- A list of all existing merger and acquisition contracts for review and verification
- Security agreements that are currently in use in the company
- Copies of all worker contracts for revision, containing the directors and manager contracts with all the crucial information
- Review all stock purchase contracts and agreement details included
- A list containing information regarding all company’s material property such as business facilities, offices, vehicles and other relevant for business property
- A list showing number of offices and business equipment under rent or lease, as well as credit information if such an option was chosen for purchasing material property of the company
- Contract details regarding any credited or under loan material property including details information of the payment methods
- A complete list of the company’s intellectual property factors such as patents and trademarks including legal protection methods used for securing each of the items
- A description of the methods used for dealing with the intellectual property of the firm along with the information of responsible personnel
- Licenses and permits issued by the state secretary regarding material and intellectual property of the company and its protection
- A complete list containing information regarding all current employees and Board of Directors of the small business targeted
- Information relevant for hiring active personnel of the firm
- A scheme diagram showing the duty delegation to every active employee member of the company and his/her obligations regarding such duties
- Description of methods used when calculating employee salary and bonuses
- A list of all employee-related insurances and bonuses currently applied in the company
- Employee motivation methods used in the company with a detailed description of each
Prepare for your due diligence
DealRoom’s small business due 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 legal, financial, HR, IT, commercial and more. And when you use a diligence tracker inside DealRoom, everything will be in one centralized space.
Financial Information
- Copies of all financial business records for the previous 3 business years
- A report on the initial total company value, containing all financial assets, as well as products if the company has an official product for selling
- Copies of the bank reports on any existing credits with the total amount left to be paid
- A description of the internal company’s financial control methods, including the financial control role of the employees
- A list of the payable and receivable income and cash flow statements
- Copies of the company’s balance sheets for foreign and domestic accounts
- Copies of the reports regarding the tax returns conducted in the previous 3 business years
- A list of all debts of the company, if applicable, with the exact amount and terms for each
- Company’s general income amount accumulated in the last 3 business years
- General cost amounts of the company listed in the previous 3 business years
- Copies of the balance sheets providing information regarding the variable and fixed costs of the firm
- A detailed description of the company’s investment policies and procedures used in the previous 3 business years
- A list showing all the company’s accounting team members, with their personal information and the accounting methods used by each member
- Copies of all previously financial audits, if conducted, containing the information about each financial auditor responsible
Legal Information
- A list containing all of the previous and ongoing legal issues and litigations that could affect the business of the company, with the description for each litigation
- A description of all of the company’s legal advisors and representatives including personal information, number of cases won and lost, and an overview of their performance on the legal behalf of the company
- A list of all of the company’s insurances and methods, with a detailed description of each
- A list including all of the necessary licenses and permits that the company must have in order to continue doing business
- Licenses and permits regarding product placement rights as well as the selling of the official company’s product
- Legal confirmation of the company’s official trademark with the necessary information that proves the trademark’s originality
- A list of all of the company’s employee insurance policies and acquiring methods for all existing policies in use
- A list detailing the situations of all previous court processes of the company
- Legal confirmation of the company’s official patent rights, if the company has any, with detailed information on how the patent is being protected as a company’s property
Organizational and Operational Items
- A copy of the company’s Article of Incorporation with relevant documentation
- An organizational chart of the target company
- A list of all of the company’s bylaws and amendments
- Copies of all the necessary business licenses and permits issued by the state attorney of the states where the company is permitted to do business in
- A list of the company’s partners and business associates and information regarding their shares in the common businesses or target company’s business equipment usage
- Copies of the relevant documentation including the details regarding current company investors and shareholders
- A complete list of the business authorizations issued by the state secretary of foreign and domestic states where the company is permitted to do business in
- A description of protection methods used for securing the official company’s trademark, logo, official websites and domains of the company
- A list of all products and services offered by the targeted small business including the information regarding product costs and margins
- Registration details and conditions that the company must have fulfilled for being able to conduct business operations
- Business compliance programs and information relevant for the business of the company
- Description of all existing marketing plans
Material and Partnership Contracts
- Review if the company has existing loan agreements, credit or lease obligations, with the detailed information on each if your newly acquired business will have to deal with those items in the future
- A list of all nondisclosure or incomplete agreements that could be inherited to the future business of the company
- Invoices and warranties of the company’s purchase orders
- A list of all existing merger and acquisition contracts for review and verification
- Security agreements that are currently in use in the company
- Copies of all worker contracts for revision, containing the directors and manager contracts with all the crucial information
- Review all stock purchase contracts and agreement details included
Intellectual & Material Property
- A list containing information regarding all company’s material property such as business facilities, offices, vehicles and other relevant for business property
- A list showing number of offices and business equipment under rent or lease, as well as credit information if such an option was chosen for purchasing material property of the company
- Contract details regarding any credited or under loan material property including details information of the payment methods
- A complete list of the company’s intellectual property factors such as patents and trademarks including legal protection methods used for securing each of the items
- A description of the methods used for dealing with the intellectual property of the firm along with the information of responsible personnel
- Licenses and permits issued by the state secretary regarding material and intellectual property of the company and its protection
Employee & Board of Directors
- A complete list containing information regarding all current employees and Board of Directors of the small business targeted
- Information relevant for hiring active personnel of the firm
- A scheme diagram showing the duty delegation to every active employee member of the company and his/her obligations regarding such duties
- Description of methods used when calculating employee salary and bonuses
- A list of all employee-related insurances and bonuses currently applied in the company
- Employee motivation methods used in the company with a detailed description of each
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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