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Due Diligence Checklist for Business Sellers

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Corporate Documents

• Articles of Incorporation and Bylaws (or LLC Agreement)

• Business licenses and permits

• Organizational chart and ownership structure

• Board meeting minutes (last 3 years)

• Shareholder agreements and stock ledgers

• List of subsidiaries and affiliates

Financial Information

• Last 3–5 years of financial statements (audited, if available)

• Year-to-date interim financials• Tax returns (last 3–5 years)

• General ledger details

• Bank statements

• Capital expenditure history

• Forecasts, budgets, and financial models

Legal & Compliance

• Pending or past litigation documentation

• Regulatory compliance and risk assessments

• Environmental and safety compliance records

• Past and ongoing investigations

• Intellectual property (IP) filings: patents, trademarks, copyrights

Contracts & Agreements

• Customer contracts (top 10 by revenue)

• Vendor/supplier agreements

• Loan agreements and debt schedules

• Lease agreements (real estate, equipment)

• Employment contracts and independent contractor agreements

• Joint ventures, partnerships, or franchise agreements

Human Resources

• Employee census and compensation structure

• Benefits and retirement plans

• Stock options, RSUs, or profit-sharing plans

• Employment policies and handbooks

• Any ongoing or past HR disputesOperations & Assets

• Real estate holdings

• Fixed asset register

• Inventory reports

• IT systems and software licenses

• Insurance policies and claims history

• Equipment leases and maintenance logs

Sales & Marketing

• Sales pipeline and funnel metrics

• Customer concentration reports

• Churn and retention statistics

• Marketing and advertising spend

• Customer feedback, surveys, and reviews

• Social media and brand assets

Growth & Strategy

• Business plan and growth strategy

• Competitive landscape analysis

• SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)

• Expansion or product development plans

Pro Tip: Buyers will appreciate a virtual data room with all documents clearly labeled and categorized.

Let’s Explore! Get in touch and we can share all that we have to offer you and your company.

Craig Dickens
Chairman
Seattle Office
Office: 253.327.1493
Mobile: 253.370.8893
Craig.Dickens@MeritInvestmentBank.com

Merit Investment Bank as a leading boutique investment bank is focused on entrepreneurial middle-market companies. Merit Investment Bank Executes sell-side M&A, buy-side M&A, and capital advisory services, debt and equity capital raises, corporate finance, and valuation services.

Securities offered through Finalis Securities LLC Member FINRA/SIPC. Merit Investment Bank and Finalis Securities LLC are separate, unaffiliated entities.

1. Immediate Post-Closing Actions

  • Confirm Closing Deliverables: Verify wire transfers, escrow deposits, and payoff letters. Ensure all signed documents are stored and circulated appropriately.
  • Communications: Issue press releases and internal announcements. Host internal debriefs to clarify deal implications and next steps. Share FAQs to address employee and client concerns.

2. Financial & Tax Considerations

  • Tax Planning: Review capital gains implications and possible elections (e.g., 338(h)(10)). Optimize allocation of proceeds among trusts, estates, and investment vehicles.
  • Wealth Management: Establish an investment strategy for sale proceeds, factoring in liquidity, diversification, and risk tolerance. Revisit estate and philanthropic plans.

3. Operational Transition

  • Integration Roadmap: Define Day 1, Day 30, and Day 100 milestones. Align IT systems, compliance, and reporting frameworks.
  • Governance & Management: Clarify new reporting lines, identify key management for retention, and set up transition service agreements where necessary.

4. Employee Retention & Culture Integration

  • Retention Programs: Offer stay bonuses or performance incentives to key employees.
  • Culture Alignment: Host integration workshops to harmonize values and workflows between merging organizations. Use pulse surveys to monitor morale and engagement.

5. Customer & Partner Management

  • Customer Retention: Conduct proactive outreach to major clients to reassure them about service continuity. Offer transition incentives if needed.
  • Supplier & Partner Relations: Reaffirm contracts, introduce new leadership, and mitigate potential disruptions in the supply chain.

6. Legal & Compliance

  • Ongoing Obligations: Track escrow releases, earnouts, and indemnification timelines. Update registrations, licenses, and insurance policies.
  • Dispute Preparedness: Maintain a documentation log and standardized process for handling any post-closing disputes.

7. Long-Term Strategic Planning

  • For Sellers: Outline reinvestment strategies—whether in new ventures, passive investments, or philanthropic initiatives.
  • For Buyers: Execute synergy realization plans and monitor KPIs to measure integration success. Refine strategy as market conditions evolve.

8. Key Deliverables for Merit Investment Bank

  1. Post-Sale Communication Playbook – For employees, customers, and press.
  2. Tax & Wealth Planning Roadmap – Personalized for sellers.
  3. Integration Milestones Tracker – With Day 1/30/100 progress indicators.
  4. Retention & Culture Alignment Plan – Ensuring people continuity.
  5. Escrow & Earnout Monitoring Checklist – For legal and financial oversight.

Merit Investment Bank as a leading boutique investment bank is focused on entrepreneurial middle-market companies. Merit Investment Bank Executes sell-side M&A, buy-side M&A, and capital advisory services, debt and equity capital raises, corporate finance, and valuation services.

Securities offered through Finalis Securities LLC Member FINRA/SIPC. Merit Investment Bank and Finalis Securities LLC are separate, unaffiliated entities.

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