M&A Business Due DiligenceComplete Document Checklist

• Transaction Type (e.g., Acquisition, Merger, Buyout)
• Purchase Price / Valuation: total purchase consideration
• Allocation of assets, stock, or goodwill
• Parties Involved: borrower (purchasing corporation) and target
• Deal Rationale: strategic objective, synergy plan, or expansion goal

• Type(s) of funding sought: Debt (bank, SBA, private credit)
• Private Equity or Investor Capital requirements
• Hybrid / Mezzanine Financing structure
• Seller Financing terms (if applicable)
• Expected Leverage Ratio (debt-to-equity or debt-to-EBITDA)
• Equity Contribution (% or total amount)
• Use of Funds: acquisition, working capital, debt refinance, or expansion
• Repayment Source: free cash flow, business operations, or equity inflows

• 3 years of corporate tax returns (federal & state)
• Audited or compiled financial statements (3 years)
• Year-to-date Profit & Loss Statement
• Year-to-date Balance Sheet
• Year-to-date Cash Flow Statement
• Monthly or quarterly comparative summaries
• General Ledger for 3 years (if any)

• Personal tax returns (3 years)
• Personal financial statement
• Schedule of personal business holdings or investments

Note: Additional requirements for single-member LLCs where personal and business finances are intertwined.

Purpose: Measures cash inflows, timing, and credit reliability from receivables.

• Aged receivables report (current, 30, 60, 90+ days)
• Key customers and outstanding balances
• Write-offs and collections policy
• Allowance for doubtful accounts

Purpose: Reviews liabilities, vendor exposure, and short-term financial obligations.

• Aged payables schedule
• Vendor list and contract terms
• Outstanding amounts owed
• Deferred or extended payment agreements

Purpose: Establishes collateral base, asset condition, and value for financing or security purposes.

• Detailed list of all fixed and movable assets (machinery, vehicles, equipment, etc.)
• Inventory List: must include Year, Make, Model, Serial/VIN number (if applicable)
• Itemized description of asset type, quantity, and location
• Purchase or lease documentation (if financed)
• Asset valuation or appraisal (if available)

Purpose: Confirms ownership hierarchy and governance structure of borrowing entity.

• Organizational chart (parent, subsidiaries, and affiliates)
• Ownership and control breakdown
• Articles of Incorporation, Bylaws, or Operating Agreement
• Shareholder or Member ledger
• Capitalization table

Purpose: Confirms target company's financial stability and historical profitability.

• 3 years corporate tax returns (federal & state)
• Audited or compiled financial statements (3 years)
• Year-to-date Profit & Loss Statement
• Year-to-date Balance Sheet
• Year-to-date Cash Flow Statement
• Monthly or quarterly reports
• General Ledger (3 years)

Purpose: Evaluates receivable liquidity and potential credit risk exposure.

• Aged receivables detail
• Major customers and balances
• Collection history and write-offs
• Allowance for doubtful accounts

Purpose: Measures short-term debt exposure and supplier reliance.

• Aged payables report
• Key vendor list and balances
• Payment schedules and supplier dependencies
• Any extended payment arrangements

Purpose: Verifies asset ownership, valuation, and suitability for collateral or acquisition.

• Detailed list of tangible and fixed assets
• Inventory List: Year, Make, Model, Serial or VIN number (if applicable)
• Physical location and condition of assets
• Asset ownership documentation and liens (if applicable)
• Recent appraisals or depreciation schedules

Purpose: Confirms target structure, control, and capitalization for legal and financial due diligence.

• Corporate organizational chart
• Ownership percentages and voting rights
• Articles of Incorporation or Operating Agreement
• Shareholder/Member ledger (if any)
• Capitalization table (if any)

Purpose: Identifies legal exposure, regulatory risk, and contractual obligations.

• Pending or historical litigation summary
• Material contracts (vendor, customer, lease, employment)
• Licenses, permits, and regulatory filings
• Insurance coverage documentation
• Compliance or environmental reports

Purpose: Provides operational understanding and future business continuity strategy.

• Overview of business operations and key personnel
• Top customer and supplier relationships
• Strategic goals and growth forecasts
• Staffing or integration plans post-transaction

Purpose: Demonstrates projected performance, repayment capacity, and long-term financial feasibility for the merged operation.

• Combined 5-year consolidated projection (Borrower + Target)
• Individual projections for each entity
• Projected Profit & Loss Statement
• Projected Balance Sheet
• Projected Cash Flow Statement
• Key assumptions (revenue, margins, capital expenditures)
• Base, Upside, and Downside scenarios