Appendix C. Due Diligence Checklist

The general topic of mergers and acquisitions was covered in Chapter 21, including a lengthy discussion of the key topics to address in a due diligence proceeding. This appendix includes a more detailed checklist that one can use as a master list, picking only those topics that appear to be relevant to the due diligence tasks at hand. They are:

Industry Overview


What is the size of the industry?


How is the industry segmented?


What is the industry’s projected growth and profitability?


What are the factors affecting growth and profitability?


What are the trends in the number of competitors and their size, product innovation, distribution, finances, regulation, and product liability?

Corporate Overview


When and where was the company founded, and by whom?


What is its history of product development?


What is the history of the management team?


Has the corporate location changed?


Have there been ownership changes?


Have there been acquisitions or divestitures?


What is its financial history?

Organization and General Corporate Issues

  1. Obtain the articles of incorporation and bylaws. Review for the existence of preemptive rights, rights of first refusal, registration rights, or any other rights related to the issuance or registration of securities.

  2. Review the bylaws for any unusual provisions affecting shareholder rights or restrictions on ownership, transfer, or voting of shares.

  3. Review the terms associated with any preferred stock or unexercised warrants. ...

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