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This sample due diligence list is NOT TO BE USED AS AN ACTUAL DUE DILIGENCE LIST. Its purpose is to act as a guide in creating a due diligence list for acquisition of a particular business. Click here to view a printable version of this 8 page due diligence list.
L. SALES AND MARKETING
Determine how potential customers are identified.
Review and determine detail regarding the average dollar sale and time requirements to close a sale. Call 10 customer references.
Review a list of the top 10 customers for each major business segments and determine the total sales for the past three fiscal years.
Review a list of the top 10 suppliers.
Review samples/copies of all product brochures, marketing materials, promotions and advertisements.
Review the sales pipeline process and determine the current sales backlog.
Review the Company's major type of customers for each major segment - by type of business, domestic vs. foreign or other classification you deem relevant. Determine if the profile of future customers will change.
Review the tenure of the average customer, including whether there are continuing contracts with customers. Determine whether special terms are offered to significant customers.
With particular emphasis on new products/services, determine future product/service trends addressing projected marketplace, features, cost, technical aspects and competition.
For each major business segment, review market share information and trends.
Review the sales and distribution strategy for domestic sales and for foreign sales (if applicable) by market segment and product line.
Review distribution channels/resources (personnel, OEM's, distributors, VAR's, systems integrators, etc.) by name, address, dollar sales, and percentage of total sales, commission percentage.
For each major business segment, review a sales breakdown (dollars and percent) by distribution channel.
Review detailed information with respect to service and support.
Determine whether future changes in sales or distribution strategies are required.
Review any cyclical factors or seasonal factors with respect to the sale of the Company's products and services.
Review the Customer Support and Service organization, including:
1. Functions
2. Personnel
3. Pre-sales and technical support
4. Post-sales assistance
5. Compliance resolutions
Review information on complaints, efficiency and effectiveness of Service/Support function.
Determine whether any support activities are billed to customers, on what basis, and if this is treated as cost recovery or a profit center.
Determine any significant quality problems within the past 36 months and describe problems or returns by product line.
With respect to competition, for each major business segment review the following information:
1. Determine each major competitor (size, products, profitability, financial strength, organization, etc.). Evaluate each of the competitor’s strengths and weaknesses in each product line.
2. Review any significant price or cost effectiveness or the technical differentials among competing products to present an anticipated competitive market share.
3. Review the most frequent basis of competition (price, quality, features, etc.) to other factors such as number of suppliers, methods of distribution, etc. that shed light on the nature and strength of competition.
M. INSURANCE
Review information with respect to self-insurance, if any.
Review information with respect to past loss and claims experience.
Review information concerning whether a change in control will cause additional cost for Workers Compensation Insurance, unemployment insurance or other insurance.
Determine if there are any unusual risks, products or events that the Company has been unable to insure.
Determine if any insurance is written on a "claims made" basis.
Review information concerning the Company's reporting and reserving practices.
Determine if any insurance policy aggregates been penetrated or exhausted.
Review who in the Company Reviews internal risk management and insurance management.
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For additional information regarding Due Diligence, contact a Business Team broker or use our buying a business or selling a business online forms. |
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