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Due
Diligence
I
Due diligence on business
A.
Corporate documents
1. Articles, including amendments
2. By-laws, including amendments
3. Minutes
4. Subsidiary documents
B. Shareholder information
1. Lists of current shareholders and
percentage owned
2. Stock options, warrants, and shareholder agreements
3. Voting trusts, or other similar agreements
C. Financial information
1. Detailed financial statements and
tax returns
2. Monthly financial statements for past two years
3. Interim financial statements for two years to date
4. Information concerning any material subsequent events
5. Accounts receivable aging schedule
6. Business plan and financial projections
7. Bank line of credit agreements or other loans
8. Lease financing agreements
D. Company background
1. Narrative history and milestone events
2. Description of facilities
3. Real and material personal property, including equip.
4. Lease terms, if facilities leased
5. Description of products or services sold & markets
6. Details on customers (number and concentrations)
7. Long term sales contracts and customer agreements
8. Warranties & guarantees provided customers
9. Supplier requirements, number, and concentrations
10.Marketing methods used, sales literature, etc.
11.Distributor agreements
12.Research and marketing studies
E. Employees, officers
and directors
1. Number of employees by major job classification
2. Employee benefit plans
3. Collective bargaining agreements
4. Organizational chart of key employees and experience
a. Age, health, education, experience, and duties
b. Ease of replacement
c. Board of directors, and extent of involvement
5. Schedule of compensation paid to officers & directors
6. Other management incentive agreements
7. Insider transactions
F. Other company information
1.Patents, trademarks, trade names,
and service marks
2. Proprietary processes or trade secrets
3. Licensing agreements
4. List of non-productive or non-operating assets
5. Information on litigation
6. Insurance policies
7. Joint venture agreements
8. Information on bona fide offers/appraisals for company
II Competition
A. Extent
of competition
1. Who are the company's major competitors?
2. Where are they located?
3. How big are they?
4. What is their market share?
5. How diversified are they?
6. Are any direct competitors publicly held?
B. Size and market
share of competitors
C. Company's competitive strengths and weaknesses
III Industry
A. Barriers
to entry
B. Growth prospects
1. Rapid growth with more expected
2. Flat or at inflationary levels
3. Declining and further decline likely
IV. Company expectations
A. Relevant
past and expected future trends
1. Growth patterns
2. Expansion or cutbacks of business segments
3. Possible spin-offs
4. Mergers & acquisitions
V. Observations
A. Growth
expectations
B. Financial condition
C. Management depth and competence
D. Product, customer, and geographic diversification
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