M&A Due Diligence Checklist

This sample request letter and initial legal due diligence document checklist are directed to the domestic seller or target company in a merger and acquisition (M&A) transaction. The form below includes a general list of documents and information requested in many M&A transactions.

Keep in mind that some requests may not be necessary for every contract management workflow. For example, certain requests may apply only to a public or private company, and certain equity and property documents may not be relevant in an asset purchase. If a request is broader than needed for the purposes of due diligence, it may be useful to limit the scope of the request. In some cases, the five-year limitation may be sufficient. In other cases, limitations such as the materiality standard may be appropriate.

[Download the sample request letter and checklist as a pdf.]

Sample due diligence request letter

Dear [Contact Person]:

We have been retained by our client, [Client Name] (“Client”) to conduct a legal due diligence review of [Seller/Target Name], a [State] [Entity Type] (the “Company,” and, together with Client, the “Parties”) in connection with the proposed [Transaction Type] transaction contemplated by the Parties. This Due Diligence Checklist identifies the information necessary to complete our review. Should you wish to provide the information to us via access to a virtual data room, please contact us in advance to arrange the terms of such arrangements.

Despite the comprehensive nature of this list, we may need to request additional information or seek further explanation as we proceed with our review. It is also possible that some of the information requests listed below are not applicable to the Company’s business. Please indicate this by checking the “N/A” box next to the specific request. Unless otherwise specified below, where applicable, please provide all relevant documentation for the past [five (5)] years.

If you have any questions about this Due Diligence Checklist, please contact [Law Firm Contact Person] at [Phone] or [E-Mail].

[Download this sample request letter and checklist as a pdf.]

Due diligence document checklist

For each requested item, the respondent should indicate whether they will provide the documentation, identify the public filing, or if the information isn’t applicable to the company’s business.

Note: The documents listed below are a sample of the materials generally requested when conducting a due diligence review. Download the full due diligence checklist for a comprehensive list of the 174 types of documents to consider including in your request.

Organizational and corporate documents

1. Copies of the articles or certificates of incorporation (or other organizational documents) and by-laws or operating agreements of the company and its subsidiaries, and all amendments thereto.
2. Copies of meeting minutes, and consents to actions without a meeting, of the shareholders, boards of directors, board committees, and similar governing bodies of the company and its subsidiaries, and all materials and documents presented at any such meeting or to any such individual.
3. An organizational chart of the company and its subsidiaries, including a list of all current officers and directors of the company and each subsidiary.
4. Biographical information pertaining to all current officers and directors of the company and its subsidiaries.
5. A list of all names under which the company and its subsidiaries have conducted business (including fictitious names) since their inception.

Financial statements and accounting records

1. Copies of all audited and unaudited financial statements of the company and its subsidiaries, including all independent auditor reports relating to such statements.
2. Copies of all correspondence and documents concerning any audits of the company and its subsidiaries, including any management letters or special reports by auditors and any responses thereto, and any letters of counsel to the company or its subsidiaries delivered to auditors.
3. A list and description of all liabilities not appearing in the most recent financial statements of the company and its subsidiaries.
4. Copies of the most recent financial or operating budgets and projected financial and cash flow statements of the company and its subsidiaries.
5. A summary of the accounting policies of the company and its subsidiaries and a description of any changes in their accounting methods, policies, or principles.

Tax matters

1. A schedule identifying in which states and local jurisdictions the company and its subsidiaries currently file any tax returns and pay any taxes, and the tax returns and taxes paid in each jurisdiction. Taxes include income, personal property, real property, payroll, unemployment, social security, VAT, and sales and use taxes.
2. Copies of all federal, state, and local income or other tax filings of the company and its subsidiaries for the three (3) most recent closed tax years and all open tax years.
3. Copies of all other documents providing evidence that the company and its subsidiaries are current on all taxes, including income, personal property, real property, payroll, unemployment, social security, VAT, and sales and use taxes.
4. A description of all tax audits involving the company and its subsidiaries for the three (3) most recent closed tax years and all open tax years, and copies of all relevant correspondence and documents.
5. Copies of all written tax sharing or tax benefit agreements, including, in connection with state unitary tax filings, involving the company and its subsidiaries, since inception and all amendments thereto.

Loans and obligations

1. A schedule of all banks, creditors, guarantors, or other lenders with which the company and its subsidiaries have a relationship, including a description of the nature of the relationship.
2. Copies of all instruments evidencing any indebtedness and lines of credit under which the company or its subsidiaries is the borrower, or to which any of their respective assets may be subject, and all amendments, consents, and waivers relating thereto.
3. Copies of all security agreements, trust indentures, mortgages, deeds of trust, guaranties, installment purchase agreements, finances, leases, letters of credit, contingent obligations, and indemnities as to which the company or its subsidiaries may be liable in whole or in part, or to which any of their respective assets may be subject, and all amendments, consents, and waivers relating thereto.
4. Copies of all documents relating to any outstanding debt, guaranty, indemnification, or similar arrangement between the company or its subsidiaries and any officer, director, manager, key employee, consultant, or shareholder of the company or its subsidiaries, and all amendments, consents, and waivers relating thereto.
5. Copies of all outstanding letters of credit and performance and other bonds issued by or for the account of the company or its subsidiaries and all amendments, consents, and waivers relating thereto.

Property and equipment

1. A schedule of all physical assets and equipment owned, held, or used by the company and its subsidiaries, including a description of the ownership and nature of such equipment and the material terms of any finance lease or security agreement related to such equipment.
2. A schedule of all inventories of the company and its subsidiaries, including descriptions, locations, and the quantity of inventory.
3. A schedule of all real property owned or leased by the company and its subsidiaries.
4. Copies of all existing title insurance policies or abstracts of title (including all binders, certificates, deeds, and other related instruments) to real property owned by the company and its subsidiaries, and all amendments thereto.
5. Copies of all leases, subleases, financing agreements, and security agreements relating to all real and personal property leased by or to the company and its subsidiaries, all correspondence with lessors or lessees regarding alleged defaults under such leases, subleases, or other agreements, and all amendments thereto.

Intellectual property

1. A list of all registered and unregistered copyrights, trademarks, service marks, patents, and other intellectual property (including all prior or pending applications relating thereto) owned by or licensed by or to the company and its subsidiaries since inception and copies of all agreements, instruments, certificates of registration, and correspondence relating to the acquisition, assignment, licensing, ownership, and registration thereof.
2. A list and description of all software owned, licensed to or by, or used by the company and its subsidiaries.
3. Copies of all active royalty, fee, and license agreements involving the company or its subsidiaries and any other documents concerning the grant to or by the company or its subsidiaries of any concessions or other special rights, privileges, or franchises concerning intellectual property, and all amendments thereto.
4. A list of all internet domain names held, assigned to, or used by the company and its subsidiaries.
5. A list and description of all pending or threatened claims for infringement or other violations of proprietary rights relating to intellectual property owned, licensed to or by, or used by the company and its subsidiaries.

Material contracts

1. Copies of all joint venture, partnership, teaming, subcontract, and alliance agreements to which the company or any subsidiary is a party, and all amendments thereto.
2. Copies of all agreements with customers making up the top [10%] of the revenues of the company or any subsidiary in its most recent fiscal year, together with all other agreements among the company and its subsidiaries, and all amendments thereto.
3. Copies of all brokers, finders, and financial advisory or similar agreements to which the company or any of its subsidiaries is a party, and all amendments thereto.
4. A list of all affiliates and associates, each as defined in Rule 12b-2 enacted under the Securities and Exchange Act of 1934, as amended, of each of the company and its subsidiaries.
5. Copies of all written agreements, and summaries of all unwritten arrangements or understandings, presently in effect between the company or its subsidiaries and any affiliate or associate or any of their affiliates or associates [since the formation of such entity], including any (a) agreements with respect to apportionment or sharing of tax liability; (b) indemnification agreements; (c) leases; (d) guaranties; (e) consulting, management, or other service agreements; (f) agreements with respect to shared facilities or functions; (g) purchase and supply contracts; and (h) licenses, and all amendments thereto.

Operational matters

1. A schedule of all customers or clients of the company and its subsidiaries.
2. A list of all suppliers and other third-party service providers of the company and its subsidiaries.
3. Copies of all form purchase and supply contracts of the company and its subsidiaries and description of their terms, including price determination, conditions, rebate arrangements, special concessions, etc.
4. Copies of all marketing, sales, franchise, distribution, commission, agency, promotion, influencer, and representative agreements, and a list of all independent salespersons or distributors for each of the company and its subsidiaries.
5. Copies of all business plans, marketing plans, sales forecasts, consultant studies or reports, and similar documents prepared in connection with the development or implementation of any marketing plan or strategy of the company and its subsidiaries, including documents discussing pricing, price trends, off-list pricing, and industry trends, whether historical or forecasted.

Litigation

1. A list and description of all pending or threatened litigation or governmental investigations (domestic or foreign) involving the company or its subsidiaries (including antitrust violations).
2. A list and description of all pending or threatened litigation or governmental investigations (domestic or foreign) involving any officer, director, manager, or holder of more than [five percent (5%)] of the outstanding capital stock, partnership interests, or membership interests of the company or its subsidiaries.
3. A list and description of all orders, writs, decrees, injunctions, judgments, or rulings by any court or agency that may bind the company or its subsidiaries.
4. A list and description of all settlements of litigation and/or any waiver agreement canceling any claim or right [of substantial value] involving the company or its subsidiaries.
5. Copies of all settlement documents relating to the company or its subsidiaries, including agreements waiving statutes of limitations or extending time.

Regulatory matters

1. A list and description of all regulatory filings, reports, licenses, permits, consents, registrations, and regulatory approvals required for the company and its subsidiaries to conduct business.
2. Copies of all regulatory filings, reports, licenses, permits, certificates of authority, consents, and regulatory approvals made or obtained by the company and its subsidiaries.
3. A list and description of all violations and alleged violations of governmental laws or regulations by the company or its subsidiaries.
4. Copies of all correspondence with federal, state, local, or foreign regulatory bodies that currently regulate or regulated any portion of the business of the company or its subsidiaries, including any notices of violations from such regulatory bodies.
5. Copies of minutes or other transcripts of meetings held with – and copies of any correspondence with – any federal, state, local, or foreign regulatory agency.

Employment and compensation matters

1. A schedule of each officer, director, manager, [key] employee, consultant, and independent contractor of the company and its subsidiaries, including his or her title, length of service, and salary, hourly rate, or other compensation (including any noncash compensation) for the last three (3) years.
2. A copy of each employment, consultant, independent contractor, noncompetition, confidentiality, nondisclosure, or similar agreement between the company or its subsidiaries and each officer, director, manager, [key] employee, consultant, or independent contractor, and all amendments thereto.
3. A copy of each agreement or other document relating to any loan or other transaction between the company or any subsidiary and each officer, director, manager, employee, consultant, or independent contractor, and all amendments thereto.
4. A copy of each employee benefit, executive compensation, or similar plan or agreement maintained by the company and its subsidiaries, including each pension, retirement, profit-sharing, incentive, bonus, commission, severance, salary continuation, change of control, stock option, stock purchase, restricted stock, deferred compensation, welfare, medical, disability, and fringe benefit plan, including all individual agreements or schedules, trust agreements, funding agreements, insurance contracts, and summary plan descriptions related thereto, and all amendments thereto.
5. Copies of the most recent IRS determination letter (or application therefor), the three most recent IRS Form 5500s (including all schedules and attachments thereto) and the three most recent actuarial reports for each such plan, as applicable.

Data and privacy security

1. Copies of all company policies related to the protection of privacy of employees, customers, and consumers, including privacy disclosures on websites, mobile apps, and other written notices of privacy practices required under applicable law.
2. Copies of all company policies directed to information security at the company and at its external service providers, including physical, administrative, and logical/computer security policies.
3. To the extent not addressed in documents responsive to item (2) above, copies of all company policies related to preparation and response to breaches of data security and/or unauthorized access to personal data of employees, customers, and consumers.
4. Copies of the last three (3) years of reports for any audits conducted on the company’s internal systems and controls, including but not limited to audits specifically directed at compliance with data privacy laws (e.g., Statement on Standards for Attestation Engagements (SSAE) or other audit protocols).
5. The name(s) and title(s) of the person(s) who function as the company’s chief privacy officer and chief security officer or who have comparable job responsibilities at the company.

Environmental, social, and governance (ESG) matters

1. Copies of all environmental investigations, reviews, or assessments, including Phase I and Phase II environmental investigations or assessments, regardless of timeframe, relating to the real property and buildings owned or leased by the company and its subsidiaries.
2. A list and description of all hazardous substances used by the company or its subsidiaries.
3. Copies of all books and records of the company and its subsidiaries relating to the use, handling, storage, transportation, and disposal of hazardous substances.
4. A list and description of any off-site hazardous material storage or disposal locations.
5. Copies of any studies, analyses, or reports on: (a) pollution and contamination resulting from the company’s business operations; (b) the impacts on biodiversity and relevant ecosystems resulting from the company’s business operations; (c) the company’s exposure to climate change risks and impacts of exposure to extreme weather; (d) the company’s energy and water usage; and e) the usage of any other scarce resources.

[This list is just a sample of the types of documents to request. Download the full due diligence checklist for a comprehensive list of materials you may want to include.]

Bloomberg Law Contract Solutions helps you comply with confidence

Due diligence is a cornerstone of the contract management process because it allows corporations to independently and objectively assess the myriad risks associated with doing business with third parties and protects them from unknowingly entering business relationships that could cause reputational harm or compliance concerns. But conducting meaningful and effective due diligence can be complex, time consuming, and labor intensive.

Download our GC Guide to Navigating 2024: Transactions and Contracts for insightful analysis and practical guidance to help you prepare for key transaction and contract developments impacting in-house legal teams in the year ahead, including a new approach to M&A due diligence.

Bloomberg Law Contract Solutions is tailored to meet the needs of corporate legal departments, helping them save valuable time and tackle complex contract management tasks with ease. Request a demo to see how Contract Solutions can help you simplify your contract workflow and more efficiently store, manage, draft, negotiate, and analyze contracts.