You’ve been assigned a major task—your firm has put you in charge of conducting due diligence for an upcoming merger. Your work will be vital to the deal’s success, as well as to your firm’s relationship with its client. Digging into a potential acquisition, and spotting any red flags in the company’s operations is an essential job for a lawyer.
However, the amount of work that due diligence entails can make a junior attorney unsure about where to begin. The process may seem overwhelming. First things first: you need an M&A due diligence checklist.
Don’t attempt to do eight things at once—without a diligence process structure, this means you could go astray in eight different ways. With a checklist as your roadmap, you will know what you need to look for, how much time you have to find it, and who to send it to. Your job becomes far more manageable.
Related blog
How to organize and conduct a legal due diligence review for US public and private deals
This checklist covers all the major categories of steps needed for both public and private M&A due diligence.
| ✓ | Handle preliminary matters |
| ✓ | Assemble the due diligence team |
| ✓ | Submit the due diligence request |
| ✓ | Distribute and organize materials |
| ✓ | Communicate and report due diligence findings |
| ✓ | Review key sources of information |
| ✓ | Determine whether specialist review is necessary |
Each step is further explained below along with some suggestions and guidelines for making checklists, for both public M&A and private M&A deals.
An M&A due diligence checklist should start with the basic requirements of any buyer, but expand to incorporate information pertinent to the deal at hand. A good M&A diligence checklist is adaptive. It takes into account the nature of the merging entities, their management and ownership structures, their marketplaces and their histories.
Making a checklist is the best way to tackle a complex, detail-oriented, and time-sensitive task to ensure more efficient and faster M&A deals.
There’s something unique about every deal. It could be the nature of the seller’s business, or the complexity of its intellectual property holdings. The deal’s structure may be novel, or a challenge to execute. Regulators may play a determining role in whether the deal gets done.
Consider the two checklists below, which advise on how to conduct due diligence for public and private deals, to be a starting point. They are guidelines to effectively run diligence, giving tips on how to assess, organize, and present all of the resources that you collect during the process.
Use them to ensure that you’re asking the right questions and finding the essential information your deal team needs. Keep in regular contact with senior members of the deal team to ensure that your checklist addresses all issues involved in the transaction.
A public deal has many moving parts. Shareholder considerations, financial reporting obligations, equity market volatility, and other outside factors can potentially influence the deal’s progress.
Because the company is public, it will have virtual piles of information for a diligence team to go through—securities filings, quarterly reports, regulatory requirements. Lawyers will need to take a host of factors into account while still preparing for surprises along the way, even if it looks like a smooth transaction on paper.
| Step | Key points | Questions |
|---|---|---|
| Handle preliminary matters | Before starting due diligence, answer some key preliminary questions. Do this before you begin talking with a client. You will be able to better craft your diligence review once you have the foundational information in place. | What type of merger is it? |
What’s the nature of the merger?
Will you need outside specialists?
Are you aware of your firm’s record retention policy?