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DUE DILIGENCE

CHECKLIST

NIGEL A.L. BROOKS

THE BUSINESS LEADERSHIP DEVELOPMENT CORPORATION


DUE DILIGENCE CHECKLIST

The due diligence package is a set of documentation prepared by


an enterprise for review by potential investors and lenders. It can
also be used for establishing a baseline for strategic planning and
profit improvement initiatives.

The checklist for the package includes:

 Enterprise

 Governance

♦ Legal form of holding entity and subsidiary entities

 Articles of incorporation
 Charter
 By-laws
 Certificate of incorporation
 Certificate of good standing

 State of incorporation
 Foreign authorizations

♦ DBA/fictitious names

♦ Tradenames

♦ Licenses and authorizations

 Business
 Professional
 Sales and use tax

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♦ Management

 Major shareholders
 Directors
 Officers

♦ Relevant board minutes and resolutions

♦ Organization charts

 Capitalization

♦ Equity capital

 Schedule of shares authorized, issued,


outstanding , and float by class and series
 Schedule of shareholders
 Schedule of warrants and options and vesting
schedules
 Stock purchase agreements
 Stock warrant agreements
 Stock option agreements

 Qualified
 Non qualified

 Restricted stock agreements and vesting


schedules
 SEC filings

♦ Debt capital

 Schedule of debt
 Schedule of debt holders
 Indentures

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♦ Schedule of assets

 Inventory
 Investment capital assets with appraisals

 Facilities (land and buildings)


 Equipment

 Plans and reports

♦ Strategic
♦ Business plan for financing
♦ Operational
♦ Financial
♦ Private placement memoranda
♦ Prospectuses and registration statements
♦ Audited or compiled financial statements
♦ Annual reports to shareholder investors
♦ Schedule of key:

 Employees
 Customers
 Suppliers
 Investors
 Competitors

 Intellectual property

♦ Patents
♦ Trademarks, trade names, and service marks
♦ Copyrights
♦ License agreements

 Licensed from
 Licensed to

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 Research and development

♦ Description of capability
♦ Feasibility studies and proofs of concept
♦ Major projects

 Marketing and product materials and descriptions

♦ Articles and press releases


♦ Brochures
♦ Advertisements
♦ Websites
♦ Product specifications
♦ Warranties and service contracts

 Insurance

♦ Schedule of carriers and policy premiums, terms,


limits, claims and settlements
♦ Key man
♦ Director and officer
♦ Business liability
♦ Product liability
♦ Property and casualty
♦ Errors and omissions
♦ Workers compensation
♦ Health
♦ Self insurance through a captive insurance company

 Litigation

♦ Pending actions
♦ Orders, decrees, and judgments

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 Merger and acquisition activity

♦ Business valuations
♦ Outstanding offers
♦ Rejected offers

 Professional service r

 Relationships

♦ Attorneys
♦ Accountants and auditors
♦ Consultants
♦ Financial institutions

 Commercial banks
 Investment banks
 Insurance companies
 Finance companies

♦ Marketing and public relations

♦ Factoring companies

♦ Collection agencies

 Strategic alliances

♦ Joint ventures
♦ Distributor relationships
♦ Insourcing and outsourcing

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 Employees

 Schedule of employees
 Schedule of compensation and benefits
 Profit sharing and pension plans
 Labor agreements
 Employee loan agreements
 Contracts
 Employee handbook
 Job descriptions

 Customers

 Receivables

♦ Schedule of aged receivables


♦ Schedule of customers, terms, amounts owing., and
guarantors
♦ Schedule of leases

 Proposals and major orders outstanding from

 Contracts

 UCC filings

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 Suppliers

 Credit and leases

♦ Schedule of aged payables


♦ Schedule of creditors, terms, amounts owing, and
guarantees
♦ Schedule of leases
♦ Contracts

 Unsecured debt and short-term borrowings


 Secured debt

 Real-estate
 Vehicles
 Other

 Leases

 Operating

 Vehicles
 Other equipment
 Facilities

 Capital

 Proposals and major orders outstanding to

 UCC filings

 Investors

 Debt
 Equity

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 Regulators

 Tax filings

♦ Income tax returns


♦ Employment tax returns
♦ Sales and use tax returns
♦ Property tax returns
♦ Tax audit reports

 Other regulatory reports

♦ Environmental
♦ Professional

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For more information...

For information about the due diligence services offered by The Business
Leadership Development Corporation visit:
www.bldsolutions.com

For information about audiobooks, books, earticles, ebooks, and eseminars


offered by The Business Leadership Development Corporation visit
www.etailia.com

For more information about the discipline of enterpriship visit


www.enterpriship.com

To assess your individual competencies in thirty minutes or less, claim


your opportunity for instant access when you go to
www.individualcompetencies.com

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About Nigel A.L Brooks...

Nigel A.L Brooks is a management consultant to entrepreneurs, business


enterprise owners, executives, and managers, and the enterprises they
serve. He specializes in developing the entrepreneurial, leadership, and
managerial competencies that build sustainable advantage from vision to
value. He is an author and a frequent speaker.

He obtained his professional experience as a partner at Andersen


Consulting (now Accenture, Ltd.), as a vice president at Booz Allen
Hamilton, Inc. (now Booz and Company), as a senior vice president at the
American Express Company, as president of Javazona Cafes, Inc., and as
president of The Business Leadership Development Corporation. He has
been a contributing editor for the Bank Administration Institute magazine,
and has served on boards of entrepreneurial networks. He was educated at
the University of Exeter, Devon, United Kingdom.

His clients are in the financial services, food services, high-tech,


manufacturing and distribution, pharmaceuticals, oil and gas, professional
services, retail and wholesale, transportation, and government industries.

He has experience in North and Latin America, Europe and Asia-Pacific.

www.nigelalbrooks.com

About The Business Leadership Development Corporation (BLD)...

The Business Leadership Development Corporation is a professional


services firm that works with entrepreneurs, lifestyle business enterprise
owners, executives, and managers, and the enterprises they serve.

BLD develops entrepreneurial, leadership, and managerial competencies


that achieve performance excellence by building sustainable advantage
from vision to value through:

 Strategic Management Consulting


 Executive Coaching and Mentoring
 Professional Training via The Center For Business Leadership
Development (CBLD)
 Motivational Speaking

www.bldsolutions.com

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THE BUSINESS LEADERSHIP DEVELOPMENT CORPORATION
13835 NORTH TATUM BOULEVARD 9-102
PHOENIX, ARIZONA 85032 USA
www.bldsolutions.com
(602) 291-4595

© Copyright 2008-10: The Business Leadership Development Corporation


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