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Acquiring Corporation – Due Diligence

due diligence high level process

In connection with a potential acquisition transaction, the following materials or information relating to the target company and any subsidiaries (together, the “Company”) are typically requested.

(A)       Corporate Documents (Minute Book) of the Company

(1)        Articles of Incorporation and all amendments;

(2)        Bylaws and all amendments;

(3)        Minutes of all Board of Directors, committee and shareholders meetings and all consents to actions without meeting;

(4)        Most recently obtained good standing certificates for all jurisdictions where the Company is qualified to do business;

 (B)      Material Contracts and Agreements

(1)        List of banks or other lenders with whom Company has a financial relationship (briefly describe nature of relationship – lines of credit, equipment lessor, etc.);

(2)        Credit agreements, debt instruments, security agreements, mortgages, financial or performance guaranties, indemnifications, liens, equipment leases or other agreements evidencing outstanding loans to which the Company is a party or was a party within the past two years;

(3)       Any other material contracts;

(C)       Litigation

(1)       Copies of any pleadings or correspondence for pending or prior lawsuits involving the Company or the Founders.

(2)       Summary of disputes with suppliers, competitors, or customers;

(3)       Correspondence with auditor or accountant regarding threatened or pending litigation, assessment or claims;

(D)       Employees and Related Parties

(1)       A management organization chart and biographical information;

(2)       Summary of any labor disputes;

(3)       Correspondence or notes concerning pending or threatened labor stoppage;

(4)       All employment and consulting agreements, loan agreements and documents relating to other transactions with officers, directors, key employees and related parties;

(6)       All compensation paid to officers, directors and key employees for most recent fiscal year showing separately salary, bonuses and non-cash compensation (i.e. use of cars, property, etc.);

(7)       Summary of employee benefits and copies of any pension, profit sharing, deferred compensation and retirement plans;

(E)       Financial Information

(1)       Financial statements since inception (unaudited if audited financials are unavailable);

(2)       Quarterly income statements for the last two years and the current year (to date);

(3)       Financial or operating budgets or projections;

(4)       Business plan and other documents describing the current and/or expected business of the Company including all material marketing studies, consulting studies or reports prepared by the Company;

(F)       Property/Assets

(1)        List of real and material personal property owned by the Company;

(2)        Sufficiency of assets – condition;

(2)       Documents of title, mortgages, deeds of trust and security agreements pertaining to the properties listed in (1) above;

(3)       All outstanding leases with an original term greater than one year for real and personal property to which the Company is either a lessor or lessee;

(4)       Documents pertaining to proprietary technology developed/owned by the Company, including any copyright or patent filings. This will also include information confirming that the Company’s systems, software and technology is owned solely by the Company and does not infringe on any other party’s rights.

(G)      Taxation

(1)       Any notice of assessment;

(2)       Income tax returns for the last three years;

(3)       Evidence of Company being current on sales tax, payroll, and other tax payments;

(I)        Insurance and Liability

(1)       Schedule or copies of all material insurance policies of the Company covering property, liabilities and operations, including product liabilities;

(2)       Schedule of any other insurance policies in force;

(3)       All other relevant documents pertaining to the Company’s insurance and liability exposure, including special reserve funds and accounts.


WCB Clearance letter
PPSA search
Court search
Corporate search (good standing)
Office of the Superintendent of Bankruptcy search
Additional searched and consents to perform them:

CRA – Income tax;


CRA – Employee remittances;

Employment Standards Branch – outstanding claims