What are due diligence checks? What is a tax Diligence Checklist? An analysis of the company’s financials with an eye towards any entries that concern the asset(s) to be purchased will reveal many of the issues that could potentially arise during an asset sale. A review of the following financial statements is in order: 1. Cash Flows Statements 4. Shareholders’ Equity Statements It should be note particular attention should be paid to the balance sheet, including any entries that pertain directly to the asset(s) being purchased. See full list on dealroom.
Legal challenges to the owner’s title to the property being sold must be thoroughly investigated and analyzed. Even a single lawsuit (or pending action) can disrupt the sale of assets. With this in min the buyer should request from the owner: 1. A detailed list of any litigation the owner is currently involved in 2. A list of any litigation the owner reasonably foresees he or she will become involved in 3. The buyer should review: 1. The articles of incorporation of the owner of the assets 2. Any bylaws or resolutions 3. Any shareholder agreements, especially USAs (unanimous shareholder agreements) 4. Existing contractual obligations of the owner could create problems for the buyer if they are only discovered after the sale of an asset. To avoid this the buyer should request from the owner: a list of all agreements that bind the owner to an obligation.
These include, but are not limited to, all: 1. Employment Agreements 6. Leases (of real and personal property) 7. If the asset being purchased contains creative or original work, the buyer should be on the lookout for any intellectual property considerations that may arise. The employment agreements of all employees who helped create the asset 2. Any patents, trademarks, trade names, or copyrights related to the asset 3. A list of employees who are essential to the maintenance and upkeep of the asset The last item is necessary in order to allow the buyer to hire or retain mission-critical employees at the time of, or before, the closing of the sale. The ownership of certain assets may trigger regulatory obligations on the part of the owner.
If the buyer is concerned that the asset to be purchased may give rise to any new regulatory requirements, he or she should request from the current owner: 1. All current business licensing requirements 3. The following items don’t fall neatly into any of the previous categories, but are considered best practices when purchasing an asset: 1. Some questions may need to be added for an industry-specific acquisition, while far fewer will be needed for an asset acquisition. Contracts obligation or commitments o Copies of any written contractual obligations that may affect assets of company. Additionally, a similar level of detailed due diligence is required in areas of the company which may not seem to be directly related to the asset purchase. A tax due diligence requirements checklist includes property taxes, tax assets , audits, returns and any overseas activities.
Target companies should provide extensive documentation on their tax history to prove their legality, legitimacy, and viability. For an investment due diligence checklist , these tax requirements will indicate a worthy transaction. Additional issues may be appropriate under the circumstances of a particular deal. DUE DILIGENCE CHECKLIST.
Regardless of whether the deal is structured as an asset transaction, a stock transaction or a merger, make sure you know what you are getting into by requiring detailed information from the seller regarding its business operations and finances. It is used so that no detail is overlooked during the analysis of the deal. BASIC CORPORATE DOCUMENTS: a. Charter documents, including Articles and Bylaws and all amendments thereof.
Conditions Precedent to Closing. Gather and review due diligence items identified on separate due diligence checklist. Do all required follow-up from due diligence checklist before closing. There is an exhaustive list of possible due diligence questions to be addressed.
Additional questions may be required for industry-specific MA deals, while fewer questions may be required for smaller transactions. Below are typical due diligence questions addressed in an MA transaction: 1. Due Diligence Matters: 1.