Financial Due Diligence Checklist

Every business will eventually come to a point where they are planning on purchasing another business, or are planning on entering into a large contract with a business. Because these ventures involve a large amount of money, it is very important that the business you are planning on working with is able to uphold their end of the deal. The best way to make sure that they are able to do this is by investigating the business. The process of investigating a business can be complicated, and so it is a good idea to use a financial due diligence checklist.

A due diligence checklist will contain all of the things you need to look into, and will help to remind you to do so. This is an excellent free financial due diligence checklist that can be easily downloaded. The checklist can be formatted to fit your particular needs, and it can even be changed to reflect the type of transaction you are planning on entering into.

Tips for Using the Financial Due Diligence Checklist

• Format the checklist based upon whether you will be purchasing the business, or if you will be entering into a contract with them.
• When formatting a financial due diligence checklist for purchasing a business, be sure to investigate how much debt the business is in. This should include things like private debt, debt held by a bank, third party debt, and mortgages. It is also important to check to see if the business has any unpaid utilities or back taxes.
• Include a reminder on you financial due diligence checklist to look into how much revenue the business brings in on a regular basis. This should include how much the business is making currently, and how much it has made over the past several years. Be sure to check to see if the business’s profits are seasonable.
• Investigate the value of the business’s holding. This should include things like the value of their revenue stream, their building, inventory, and any financial property they hold.
• Check to see if the business is currently going through the process of closing. See if they are behind on debt payments, and if they have entered into negotiations to sell it.

Download: Financial Due Diligence Checklist