Mergers and Acquisitions For Dummies (66 page)

Names and contact info of directors and officers

Listing of the jurisdictions where the company is incorporated or qualified to do business

Listing of any assumed names or DBAs (doing business as) of the company

Listing of all federal, state, local, and foreign governmental permits, licenses, and approvals

Listing of all law firms, accounting firms, consulting firms, and similar professionals engaged by the company

As you may be able to tell from reviewing this list, Seller's lawyer be involved with this part of due diligence. Many Sellers, when faced with some of the items on this list, respond with a blank expression and mumble, “Huh?” Sellers should check with the lawyer who incorporated the business if they're unable to locate these documents.

Operations

A company's operations are highly important. That should go without saying. But what does “operations” mean, and more specifically, how does a Buyer conduct due diligence on operations?

In a typical due diligence process, most Buyers seek the following information for evaluating operations:

Listing of all existing products or services, all products or services under development, any major operations discontinued or expected to be discontinued, and copies of all complaints and warranty claims

Correspondence related to any product or services regulatory approval (or disapproval)

Detail on any rebate programs or other special deals with customers (discounts, terms, and so on)

Contracts or agreements with customers, whether formal or informal

Customer quality awards, plant qualification/certification distinctions, quality certifications, or other awards or certificates

Listing of all business application software, vendor and version, number of licenses, and approximate acquisition date

In addition to reviewing a slew of operations-oriented documents, Buyers often want to see Seller's facility, especially if Seller is a manufacturing or distribution company — in other words, a business with inventory and/or involved with fabrication. Flip to Chapter 10 for more thoughts on meetings between Buyer and Seller.

Financials

I hope no one is surprised to hear that financial information is the cornerstone of M&A deals. As you can probably guess, Buyers conduct a thorough review of Seller's financial information. In all likelihood, the financial review will be the most intensive and important of the due diligence process.