| The due diligence study is done by investors or lenders | | | | Licenses, permits, approvals, etc.- Bonds posted for |
| to be certain that your company is operating properly | | | | licenses, permits, etc.- Records of any investigation, |
| and efficiently. The in depth due diligence study will | | | | inquiry, or inspections by government- Government |
| uncover any accounting errors and any operational | | | | orders with which the company must comply4. |
| problems. After completing the due diligence study, the | | | | Financing:- Documents evidencing loans, secured and |
| investors or lenders must be satisfied that they are | | | | unsecured, and personal guarantees- Bank |
| invested money in a company that conducting its | | | | agreements confirming lines of credit- Documents |
| business in the best possible way. The due diligence | | | | evidencing sale, lease-back, instalment purchases, sales |
| study will review the following fifteen areas:1. | | | | contracts, loanagreements- Correspondence to and |
| Corporate records:- The company's original articles of | | | | from lenders- Evidence of satisfaction or liens or |
| incorporation or articles of organization- By-Laws and | | | | debts5. Financial information- Audited financial |
| minutes of any Board meetings, executive committee | | | | statements- Unaudited monthly and quarterly financial |
| meetings, andshareholder meetings- Stock issuance | | | | statements- Capital budgets, changes in accounting |
| and transfer- The company's communication with | | | | practices- Inventory summary- Aged accounts |
| shareholders- Press clippings and press releases- | | | | receivable and payable- List of all assets with |
| Applications for and documents authorizing the | | | | purchase price- Correspondence with inside and |
| company to do business in another state- Stockholder | | | | outside accountants6. Taxes:- Federal, state, and local |
| agreements, voting, proxies, and other similar | | | | tax returns- Any adjustments, settlements, recapture, |
| documents- The company's organization chart | | | | or notices with taxing authority- FICA, FUTA, and other |
| showing how it is structured and if there are any | | | | employee withholding- Calculations of tax basis, book |
| affiliates2. Insurance:- All insurance policies, their | | | | basis, and depreciation of all assets7. Customer |
| coverage limits, the deductibles, renewal dates, and | | | | information- Customer agreements- List of 10 largest |
| premiumspaid or owed- Insurance claim history3. | | | | customers and list of sales to each- Government or |
| Government regulations and filings:- Reports and | | | | quasi-government customers- Catalogs, product |
| correspondence with any governmental authority- | | | | literature, advertising, and price lists8. |