Where Can Due Diligence Be Applied?

[Charles Bacon]

I am often asked where due diligence can be applied. What follows is a partial list of the many areas where due diligence can help a company:

Accounting Procedures
Accounting Systems
Acquisitions, Mergers or Sales of Businesses
Analysis of Present & Future Products & Services
Assumptions for Projections
Attendance at Seminars, Conferences & Shows
Avoidance of Conflicts of Interest
Board of Directors Issues
Brand and Reputation
Budgeting
Business Plans
Buy-Sell Agreements
Capital Expenditures
Cash Flow
Communication & Teamwork
Compensation & Benefit Plans
Computer Systems & Capabilities
Contracts
Contributions of each Profit Center to Overall Performance
Corporate Acquisition Candidates
Corporate Budget
Corporate Culture
Corporate Planning
Cost Structures
Credit-Reporting
Customers
Decision Processes
Developing the Optimum Timing of Exit Planning events for generating the Optimum Value of the Transfer
Disaster Recovery
Document Flow
Employee Benefit Systems
Employee Hiring and Retention
Employee Satisfaction
Employee Stock Ownership
Equity Capital
Equity Compensation
Exit Planning for the Future Transfer of Business Interests to Family, Employees, Partners, or Outside Purchasers
External Market Environment Assessment
Financial Analysis
Financial Statements
Future Earnings Stream
Future Expansion Projects
Gifts of Stock or Securities
Industry Publications
Insurance
Intellectual Property Policies & Assets
Intellectual Property Security
Internal & External Business Documents
Internal Accounting Controls
Internal Audit Function
Internal Communications Strategy & Media
Issuance of Securities
Key Relationships
Key Senior Positions
Litigation & Administrative Actions
Loans & Financings
Management Communications
Management Succession Systems
Management Systems
Managerial Skills & Talents of Key Individuals
Market Research
Marketing & Sales Methods
Marketing Budget
Marketing Procedures
Methods of Evaluating Existing Products & Services
New Products & Services Evaluation
Objectives Set for the Business
Organization Chart, Existing Team & Planned
Organization Development
Organizational Structure
Outside Contractors
Outside Professional Firms
Partnership Dissolutions & Divorce Proceedings Affecting Business
Performance Reviews
Personnel Policies
Personnel Training and Development
Plans for New Locations
Press Interaction
Pricing & Pricing Strategy
Profit Generators & Indicators
Promotional Materials
Public & Private Offerings
Relationships with Vendors, Suppliers, & Alliances
Reporting Procedures
Research & Development
Resource Handling & Availability
Safety
Sales & Marketing Relationships
Sales Methods
Security
Shareholder Issues
Strategic Business Planning
Strengths & Weaknesses of the Organization
Team Growth
Technology


Applying due diligence to all parts of an organization will help improve financial performance, strengthen competitive positions, expand organizations more effectively, preserve human performance and increase internal know-how. With these improvements, companies are better able to grow through mergers and acquisitions, spin-offs, and alliances. Comprehensive due diligence brings new power to the organization, adding to the existing strengths of management and staff, creating more value for a unit or division, as well as improving its abilities and success rate when acquiring or merging with new firms.