M&A Due Diligence: Corporate Information - dummies

M&A Due Diligence: Corporate Information

By Bill Snow

The expanse of due diligence information is far deeper and wider than the information that the M&A offering document, or deal book, provides. The offering document provides enough information for a Buyer to make an offer. Due diligence provides enough information for that Buyer to be able to close the deal.

Buyers want to pay close attention to a bevy of legal paperwork to make sure Seller actually has the legal right to sell the business to Buyer. Not having the legal right to sell something poses a wee bit of a problem in selling a business!

Here are some of the items Sellers should provide for the review of corporate information:

  • The company’s articles of incorporation, bylaws, and minutes from board meetings

  • Annual reports

  • Names and contact info of shareholders and number of shares held by each

  • Names and contact info of directors and officers

  • Listing of the jurisdictions where the company is incorporated or qualified to do business

  • Listing of any assumed names or DBAs (doing business as) of the company

  • Listing of all federal, state, local, and foreign governmental permits, licenses, and approvals

  • Listing of all law firms, accounting firms, consulting firms, and similar professionals engaged by the company

As you may be able to tell from reviewing this list, Seller’s lawyer be involved with this part of due diligence. Many Sellers, when faced with some of the items on this list, respond with a blank expression and mumble, “Huh?” Sellers should check with the lawyer who incorporated the business if they’re unable to locate these documents.