M&A due diligence checklist
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A due diligence checklist, usually called a request list, is the set of documents and answers a buyer asks a target company for before it signs. This one is organized the way most deal teams work: by workstream, with numbered requests, a priority and an owner for each. Use it as a starting point and shape it to the deal.
Download the Excel template
The request list on this page as a spreadsheet, organized by workstream with columns for number, category, requester, status, assignee, priority and due date. Enter your work email and role, and the download starts right away.
How a due diligence request list is organized
Requests are grouped into workstreams, each usually run by a different advisor: the financial sponsor's own team on business questions, accountants on financial and tax, lawyers on legal, and specialist advisors on HR and technology. Each request gets a number that never changes once the list is sent, so 2.4 means the same thing to everyone for the whole deal.
Every request should carry six things: the number, the workstream, a clear description, who asked for it, a priority, and an owner on the target's side with a due date. Status is usually kept to three values: open, partial and complete.
The checklist
Business and commercial due diligence checklist
How the company makes money, who buys from it and how durable that revenue is.
- 1.1Company overview: history, ownership structure, locations and organization chartPriority: High
- 1.2Current business plan and board-approved budget for the current fiscal yearPriority: High
- 1.3List of top 20 customers by revenue for the last three fiscal years and year to datePriority: High
- 1.4Copies of contracts with the top 20 customers, including amendmentsPriority: High
- 1.5Customer churn and retention by cohort for the last three fiscal yearsPriority: Medium
- 1.6Revenue by product or service line, geography and channelPriority: Medium
- 1.7Sales pipeline report with stage, value and expected close datePriority: Medium
- 1.8Pricing policy, standard price lists and discounting approval processPriority: Low
- 1.9List of top 20 suppliers by spend, with copies of material supply agreementsPriority: Medium
- 1.10Overview of key competitors and the company's view of its market positionPriority: Low
Financial due diligence checklist
Whether the reported numbers hold up, and what the business really earns and needs to run.
- 2.1Audited financial statements for the last three fiscal years, with auditor management lettersPriority: High
- 2.2Monthly income statement, balance sheet and cash flow for the trailing 24 monthsPriority: High
- 2.3Year-to-date management accounts with comparison to budget and prior yearPriority: High
- 2.4Bridge from reported EBITDA to adjusted EBITDA, with support for each adjustmentPriority: High
- 2.5Accounts receivable and accounts payable aging as of the latest month endPriority: Medium
- 2.6Revenue recognition policy and any changes in the last three yearsPriority: Medium
- 2.7Schedule of debt, leases and other financing arrangements, with copies of agreementsPriority: High
- 2.8Net working capital by month for the trailing 24 monthsPriority: Medium
- 2.9Capital expenditure by year for the last three years, split maintenance and growthPriority: Low
- 2.10Schedule of off-balance-sheet liabilities, guarantees and commitmentsPriority: Medium
Legal due diligence checklist
What the company owns, what it has agreed to, and what could be claimed against it.
- 3.1Certificate of incorporation, bylaws and all amendmentsPriority: High
- 3.2Capitalization table and copies of all equity, option and warrant agreementsPriority: High
- 3.3Board and shareholder minutes and written consents for the last three yearsPriority: Medium
- 3.4List of material contracts, including any with change-of-control or assignment provisionsPriority: High
- 3.5Summary of pending or threatened litigation, claims and regulatory inquiriesPriority: High
- 3.6Schedule of owned and registered intellectual property: patents, trademarks, domainsPriority: Medium
- 3.7Copies of material licenses, permits and regulatory approvalsPriority: Medium
- 3.8Real estate: list of owned and leased properties, with copies of leasesPriority: Low
- 3.9Insurance policies and claims history for the last five yearsPriority: Low
- 3.10Data privacy policies and any data breach or regulatory notification in the last three yearsPriority: Medium
Tax due diligence checklist
Filings, exposures and open audits that a buyer would inherit.
- 4.1Federal, state and local income tax returns for the last three yearsPriority: High
- 4.2Sales and use tax filings and nexus analysis by statePriority: Medium
- 4.3Payroll tax filings for the last three yearsPriority: Medium
- 4.4Open tax audits, notices and correspondence with tax authoritiesPriority: High
- 4.5Tax structure chart and any tax-sharing agreementsPriority: Medium
- 4.6Schedule of net operating losses and tax credits, with any limitationsPriority: Low
- 4.7Transfer pricing documentation for intercompany transactionsPriority: Low
HR due diligence checklist
The people, what they are paid, and the obligations that come with them.
- 5.1Employee census: title, department, location, hire date, compensation and FT/PT statusPriority: High
- 5.2Organization chart with management team and direct reportsPriority: High
- 5.3Employment agreements for senior management and key employeesPriority: High
- 5.4Benefit plan documents and summary plan descriptionsPriority: Medium
- 5.5Bonus, commission and incentive plans, with payouts for the last two yearsPriority: Medium
- 5.6Employee handbook and key HR policiesPriority: Low
- 5.7Contractor and consultant list, with agreements for the largest engagementsPriority: Medium
- 5.8Pending or threatened employment claims, and any union or works council agreementsPriority: High
- 5.9Voluntary and involuntary turnover by department for the last three yearsPriority: Low
Technology due diligence checklist
How the product is built and run, and the risks in the stack.
- 6.1Architecture overview of the core product and supporting infrastructurePriority: High
- 6.2Hosting and infrastructure providers, with contracts and current monthly spendPriority: Medium
- 6.3Product and engineering roadmap for the next 12 to 18 monthsPriority: Medium
- 6.4Engineering team structure, headcount and use of contractors or offshore teamsPriority: Medium
- 6.5Open source license inventory for the core productPriority: Medium
- 6.6Information security policies, and the most recent penetration test and remediation statusPriority: High
- 6.7Security incidents and data breaches in the last three yearsPriority: High
- 6.8Backup, disaster recovery and business continuity plans, with the last test datePriority: Medium
- 6.9List of third-party software and SaaS vendors with annual spendPriority: Low
- 6.10Technical debt assessment and known product limitationsPriority: Low
This is a general starting point, not legal, tax or accounting advice. Every deal needs its own list, reviewed by your advisors.
Where a spreadsheet request list breaks down
Versions multiply.
Each party edits its own copy, and nobody is sure which file is current.
Answers end up in inboxes.
Responses arrive by email and someone has to copy them back into the list.
Status goes stale.
The list is only as current as the last person who updated it.
Lists overlap.
Each advisor sends its own list, and someone has to merge them into one before the target sees it.
Run this list in Cerclen
Cerclen imports this spreadsheet as it is. Sections, numbering and owners carry over, and you review every request before anything is sent. From there, the target can answer each request by email or with a link to the data room, and the list stays current for both sides.
Frequently asked questions
- What is a due diligence checklist?
- A list of the documents and information a buyer requests from a target company before an acquisition, organized by workstream. It's also called a due diligence request list or data request list.
- Who prepares the due diligence request list?
- Usually the buyer and its advisors. Each advisor drafts requests for its own workstream, and the buyer or its banker combines them into one list for the target.
- What are the main areas of due diligence?
- Most deals cover business and commercial, financial, legal, tax, HR and technology. Larger or regulated deals add others, such as environmental, insurance or regulatory diligence.
- Is this checklist complete?
- No checklist is. This one is a starting point covering the requests most deals include. Add industry-specific requests and remove what doesn't apply.