A due diligence check list is a vital part of the M&A procedure. It can help buyers avoid costly and time-consuming surprises, by revealing the company’s liabilities and contract issues intellectual property concerns, and risks associated with litigation. It helps them determine whether a deal is suitable for them from a culture standpoint.

The creation of a Due Diligence Questionnaire (DDQ) is an overwhelming task, particularly for small entrepreneurs who have never created one before. It’s crucial to be thorough, but not so in the sense that the business is not able to answer it.

The list of documents required can be extensive, but there are some basic demands that are always included. Included are three to five years worth of financial reports, tax returns including insurance policies, contracts for employment and copies of the operating agreement or bylaws.

These could make the DDQ more efficient for both the seller and the buyer. It can also help decrease the chance that sensitive information is shared without the proper security measures in place.

Although the process of due diligence can be stressful, with the right planning, it can be reduced and as simple as possible. Begin working with your M&A advisor to determine the items that buyers are likely to want and prepare those documents prior to the selling process can go ahead quickly. For more information on how to prepare your business for virtual data room reviews an effective sale, contact the Allan Taylor & Co team today!