Checklist for Due Diligence in Company Sales

Hours Updated on

Before a company is sold, buyers want to know exactly what they’re getting into. This checklist provides a comprehensive overview of all documents and information that are examined during due diligence – legal, financial, business, and technological.

The list appears frighteningly long. Prepare the documents early. A structured due diligence not only increases the chances of sale but also the selling price – through transparency, trust, and minimized risk for the buyer.

With this checklist, you keep track and ensure that your company is ready for inspection – clear, complete, and convincing.

Legal Due Diligence

I. Company and Structure

  • Current commercial register extract
  • Articles of association and bylaws
  • List of shareholders with participation quotas
  • Company organizational chart
  • Rules of procedure for management
  • Minutes of shareholders’ meetings / management meetings
  • Contracts between company and shareholders
  • Employee participation models (existing/planned)

II. Contracts Participations

  • Important contracts (customers, suppliers, distribution partners)
  • Joint ventures, cooperation agreements
  • Overview of participations in other companies
  • Obligations for capital increases
  • Atypical contracts with liability risks or outside normal business
  • Overview of warranties and other liabilities

III. Liabilities Financing

  • Overview of all significant liabilities including loans, leasing, guarantees
  • Bank accounts including balances
  • Off-balance sheet liabilities with significant impact
  • Currency management

IV. Labor Law Personnel

  • Sample employment contracts and performance structure
  • Managing director contracts
  • Bonuses, profit shares, variable compensation
  • Pension plans and social benefits
  • Works agreements, collective bargaining agreements
  • Staff reduction plans (if any)
  • Labor disputes in the last 3 years

V. Legal Disputes Authorities

  • Ongoing or threatened legal disputes
  • Proceedings against organs or employees
  • Disputes with authorities (e.g., tax, environment)
  • Risks due to legal violations

VI. Taxes

  • Tax returns and assessments for the last 3 years
  • Reports from past tax audits

VII. Intellectual Property R

  • Overview of trademarks, patents, licenses (including protection period significance)
  • Ongoing R projects including prospects of success and costs

VIII. Real Estate Rental Agreements

  • Ownership locations of strategic importance
  • Important rental, lease, or leasing agreements

IX. Environment Sustainability

  • Environmental liabilities, expert opinions, studies (air, soil, water)
  • Requirements, complaints by environmental authorities

X. Insurance

  • Essential insurance policies (e.g., general liability, property insurance)
  • Uninsured risks
  • Damage cases > €50,000 in the last 3 years

XI. Additional Documents

  • Relevant permits and trade law requirements
  • ISO certificates
  • Internal reports and analyses

Financial Due Diligence

  • Annual financial statements, management reports, and audit reports of recent years
  • Current investment plan
  • Calculation scheme for pricing
  • Inventory list of tangible assets with valuations
  • Overview of credit lines and their utilization

Business Due Diligence

I. Business Model Market

  • Description of product / service offering
  • Transferability to other markets (e.g., internationalization)
  • List of key suppliers

II. Market Competition

  • Overview of main competitors
  • Competitive advantages of the company
  • Market volume trends

III. Sales Customers

  • Essential sales channels and structures
  • Customer list and current acquisition projects
  • Sales planning – feasibility compared to competition

IV. Organization Team

  • Organizational chart with role descriptions
  • Qualifications and key positions in the team

Technological Due Diligence

  • Technologies used and intellectual property rights (patents, designs, software)
  • Degree of innovation technological edge
  • Security concept (e.g., IT, data protection)
  • Scalability of systems processes
  • R activities