Business Consulting specializing in professionally confidential targeted mergers and acquisitions in the small to mid-market range; exclusively in the Drug Testing/Employment Screening/Urgent Care and Occupational Health Industry.
Typically, following a "Letter of Intent", the prospective buyer will want significantly more information then what is provided in a prospectus and financial summary.
The following "due diligence checklist" is not intended to be a defining list, because each company's due diligence will differ somewhat, but is instead intended to give a seller a "snap shot" of what some of the typical requests for information might be.
It is highly likely that a qualified suitor will want to see the following.
Person Responsible | Date Received | Item Description |
---|---|---|
_____________ | _____________ |
Financial statements for last 3 years, plus interim (including Auditors report, if available) |
_____________ | _____________ |
Monthly summary income statement schedule for last 12 months |
_____________ | _____________ |
Federal Income Tax returns for last 3 years |
_____________ | _____________ |
State Income Tax returns for last 3 years |
_____________ | _____________ |
Detail schedule of G&A costs for the current year (min. of 6 months) |
_____________ | _____________ |
Copies of all debt agreements booked against these assets |
_____________ | _____________ |
Copy of current and prior year budgets |
_____________ | _____________ |
Accounts receivable aging as of the most recent month end for assets |
_____________ | _____________ |
Schedule of write-offs for the current and prior year |
_____________ | _____________ |
Accounts payable aging as of the most recent month end |
_____________ | _____________ |
Current detailed Inventory schedule, with volumes and values (applies to on-site devices, etc.) |
_____________ | _____________ |
Copies of lease agreements (other than real estate) |
_____________ | _____________ |
Discussion of contingent liabilities (bonus's, earnout agmts., EEOC, SEC, IRS, etc.) |
_____________ | _____________ |
Discussion of any purchasing, financing, royalty, franchise or other commitments |
_____________ | _____________ |
Personnel organization chart ( this will give them an idea of how clients interact with you) |
_____________ | _____________ |
Listing of employees, showing location, job description, pay rate, and date of hire |
_____________ | _____________ |
Schedule of benefits plans, with supporting documentation |
_____________ | _____________ |
Discussion of all lawsuits for past three years |
_____________ | _____________ |
Discussion of any threatened or pending legal action |
_____________ | _____________ |
Corporate legal structure |
_____________ | _____________ |
Discussion of operations, accounting, and sales management software |
_____________ | _____________ |
Laboratory contract and sample billing for most recent month |
_____________ | _____________ |
Medical Review Officer contracts and sample billing for most recent month |
_____________ | _____________ |
Copies of all distribution contracts, if any |
_____________ | _____________ |
Copies of all employment agreements |
_____________ | _____________ |
Copies of subcontractor agreements |
_____________ | _____________ |
Copies of contract labor agreements, and schedule of contract personnel |
_____________ | _____________ |
For both current YTD and prior year, schedule of revenue by contract (agrees to income stmts.) |
_____________ | _____________ |
Copies of all material contracts (minimum of 75% of total revenue derived above) |
_____________ | _____________ |
Copies of sales and marketing literature |
_____________ | _____________ |
Listing of all customers billed in the last 6 months, sorted by revenue |
_____________ | _____________ |
Copies of recent press releases and/or news articles |
_____________ | _____________ |
Current sales backlog report, showing customer information with est. volumes and values |
_____________ | _____________ |
Discussion of selling expenses, ie, commission plans, vehicle leases, marketing costs, etc. |
It is highly likely that a qualified suitor will want to meet with several of your clients, especially those that command the highest sources of revenue and, not withstanding that, structure a contract that guarantees retention of a percentage of the client base (usually 90%) for a certain period of time (typically one year).