Introduction

Mergers and acquisitions (M&A) require comprehensive due diligence to ensure both buyers and sellers are fully informed and prepared. Properly gathering and organizing key documents reduces surprises, speeds up the process, and helps achieve a successful transaction.

This guide outlines the crucial items both parties should collect to streamline the acquisition process.

1. Financial Documents

Accurate financial data allows buyers to assess the target company’s performance and risks.

Documents to Gather:

  • Audited financial statements from the past 3–5 years
  • Tax returns and tax compliance documents
  • Accounts receivable and payable aging reports
  • Budgets, forecasts, and business plans
  • Debt and loan agreements

2. Contracts and Agreements

Reviewing contractual obligations uncovers liabilities and operational dependencies.

Key Contracts Include:

  • Customer and vendor agreements
  • Employment contracts and non-compete agreements
  • Leases and real estate contracts
  • Licenses, permits, and regulatory filings
  • Loan and credit facility agreements

3. Intellectual Property (IP)

IP assets are often key value drivers and must be carefully vetted.

Important IP Documents:

  • Trademarks, copyrights, and patent registrations and applications
  • IP assignment agreements and licenses
  • Trade secret policies and confidentiality agreements
  • Ongoing disputes or infringement claims related to IP

4. Capitalization Tables and Equity Ownership

Clear understanding of ownership stakes and securities issued is critical.

What to Prepare:

  • Current cap table showing shareholders and equity percentages
  • Stock option plans and warrants
  • Convertible notes or other securities outstanding
  • Historical equity issuance and transfers

5. Additional Due Diligence Items

Other areas can impact valuation and risk assessment.

  • Pending or threatened litigation and legal compliance matters
  • Employee benefits, insurance policies, and pension plans
  • Environmental reports and regulatory compliance
  • IT systems and cybersecurity documentation

Pro Tip

Organize documents in a secure virtual data room to facilitate efficient sharing and review during the M&A process.

Next Steps

Thorough due diligence reduces surprises and builds trust between buyers and sellers. Early preparation and open communication are key to a smooth acquisition.

Zecca Ross Law can help you prepare and review due diligence materials to ensure your M&A transaction proceeds confidently and successfully.