Due Diligence Checklist
Company Financing Due Diligence RequestA. BOARD / SHAREHOLDER ACTIONS AND MINUTES
1. All stockholder actions and meeting minutes.
2. All board actions and meeting minutes.
B. CHARTER DOCUMENTS
1. Overview of corporate legal structure, subsidiaries, joint ventures and divisions.
2. Company’s Articles of Incorporation, Constitution & By laws, including amendments.
C. STOCK & CAPITAL STRUCTURE
1. Share capitalization table: list current stockholders and option holders, including issuance dates, number of shares and price. List identities, control structures /voting rights of all holding vehicles, including trusts.
2. Shareholder agreements and amendments and documents outlining any rights associated with relating to the sale, voting, or transfer of securities of the Company. Including: (i) Voting of securities and restrictive share transfers (ii) Preemptive or other preferential rights to acquire securities, including rights of first refusal (iii) Registration rights.
3. Agreements evidencing options, warrants, convertible debt or other agreements relating to the purchase, repurchase, sale of issuance of securities.
4. Vesting schedules for any stock or options.
D. LEGAL AND REGULATORY
1. All documents and correspondence relating to any pending litigation, threatened litigation, or disputes which could potentially lead to litigation involving the Company, its executive officers or its directors.
2. Any consent decrees, injunctions, judgments, other decrees or orders, settlement agreements or similar matters.
3. Correspondence with auditors regarding threatened or pending litigation, assessment or claims.
4. Correspondence, memoranda or notes concerning inquiries from federal or state tax authorities.
5. Correspondence with auditors regarding threatened or pending litigation, assessment or claims.
E. INTELLECTUAL PROPERTY
1. A list of patents, copyrights and trademarks, and any searches, especially prior art searches and freedom to operate searches, relevant to such items that have been done.
2. Form of Proprietary Information and Invention Agreements signed by past or present employees and consultants. Any documentation relating to the transfer to the Company or any employee of any technology.
3. A list of employees or consultants who have not signed Proprietary Information and Invention Agreements, including a list of any periods of time where key employees or consultants performed services for the Company while not bound by such agreements.
4. Any correspondence or documents relating to allegations of the Company's infringement of the proprietary rights of others, or allegations by the Company of infringement of its proprietary rights.
5. Any licenses or agreements of any kind with respect to the Company's or others' patent, copyright, trade secret or other proprietary rights, proprietary information or technology. Include any correspondence or internal discussions considering the use of other intellectual property.
6. Any agreements concerning confidentiality and nondisclosure with employees, contractors, customers or other parties.
F. MANAGEMENT, EMPLOYEES AND CONSULTANTS
1. List of officers and directors and corresponding biographies (or resumes). Note any officer not currently devoting 100% of their business time to the Company.
2. List of employees; including former employees. Outline projected headcount and personnel hiring plans; identify skill shortages and recruiting issues.
3. List at least two professional references for each officer, director and key management team member.
4. Any agreements (including employment agreements, indemnification agreements and any loans or guarantees), understandings or proposed transactions between the Company and any of its employees, officers, directors, or any affiliate.
5. Employee stock option plans, employee benefit and profit-sharing plans, including stock purchase deferred compensation and bonus plans or arrangements.
6. Evidence of authorized working visas for all employees for the applicable countries or territories.
7. List of advisors, including legal counsel and auditors. Any consulting contracts or outsourced resources contracts.
G. FINANCIAL INFORMATION
1. Balance sheets (current and prior years).
2. Income statements (P&L) (current and prior years).
3. Cash flow statements (current and prior years).
4. All financial reports, financial forecasts and budgets (current and future years), including capital raising requirements and anticipated capital expenditures.
5. All federal, state and international tax filings and R&D tax rebates.
6. Any Government grant applications, subsidies or agreements.
H. DEBT FINANCING & COMPANY OBLIGATIONS
1. All debt instruments and credit agreements entered into by the Company, including lease financing, currently in effect.
2. Any guarantees of third party obligations.
3. Loan agreements, mortgages, pledges, deeds of trust and other security agreements.
I. OPERATIONAL AGREEMENTS
1. Lease agreements for offices, manufacturing and other facilities.
2. List of major customers and copies of agreements.
3. List of suppliers and manufacturers and copies of agreements.
4. Manufacturing, OEM and distribution agreements.
5. Joint venture and partnership agreements.
6. Service and marketing agreements.
7. Licensing agreements and royalty agreements.
8. Agreements requiring consents or approvals in connection with the financing.
9. Any other agreements material to the business of the Company, or outside the ordinary course of business.
10. Standard forms of agreements used by the Company.
11. Any contract restricting the ability of the Company to compete in any line of business with any person or entity, or committing the Company or any subsidiary to continue in any line of business.
12. Summary of insurance coverage and any material exposures.
J. TECHNICAL DILIGENCE
1. Clear statement of technology and its technical capability. Details of demonstrated technical performance to date and supporting data evidencing this performance.
2. Technology development plan and timeline.
3. Assessment of technology scalability and feasibility.
4. Review of manufacturing process, facilities and scalability.
5. Production costs (COGS) and bill of materials detail.
K. COMMERCIAL DILIGENCE
1. Current business plan, including opportunity analysis and market potential.
2. Any reports or studies, including industry and market reports prepared by the Company or third parties.
3. Sales cycle and business model details.
4. List of customer references. List of customer trials and pending customer relationships, including customer pipeline.
5. Competitive landscape overview. Detailed competitor analysis and competitive positioning.
6. Presentations and marketing materials, especially customer and investor pitches.