Due Diligence Checklist (Buyer) — 75+ Items

□ 3 years of federal and state income tax returns (business entity)
□ 3 years of compiled, reviewed, or audited financial statements (P&L, balance sheet, cash flow)
□ Year-to-date financial statements (within 60 days of closing)
□ Monthly revenue breakdown by product/service line (last 3 years)
□ Accounts receivable aging report (current)
□ Accounts payable aging report (current)
□ Bank statements — all accounts (last 12–24 months)
□ Merchant processing statements if revenue includes card payments
□ Loan and debt schedules — all outstanding liabilities
□ Lease obligations and capital lease schedules
□ Depreciation schedules for all fixed assets
□ Owner's compensation, distributions, and perks (add-backs)
□ SDE (Seller's Discretionary Earnings) or EBITDA calculation with documented add-backs
□ Cash handling procedures and controls (for retail/cash businesses)
□ Any prior-year audits or reviews by outside accountants
□ QuickBooks or accounting software file (or access) for detailed transaction review

□ Articles of incorporation/organization and all amendments
□ Operating agreement, bylaws, or partnership agreement
□ Certificate of good standing (current — within 30 days)
□ List of all owners, members, shareholders, and ownership percentages
□ All prior ownership transfers, buy-sell agreements, and equity grants
□ Any existing liens, UCC filings, or encumbrances on assets (run UCC search)
□ All pending or threatened litigation, claims, or regulatory investigations
□ Prior litigation history (last 5 years) — settlements, judgments
□ Any consent decrees, injunctions, or regulatory orders
□ Insurance policies and claims history (last 3 years)
□ D&O, E&O, general liability policy details
□ Federal and state business registrations and foreign qualifications
□ EIN confirmation and business license certificates
□ Any franchise agreements or licensing agreements governing the Business

□ All customer contracts and master service agreements (including auto-renewal clauses)
□ Top 10 customers — current contract status, renewal dates, change-of-control provisions
□ All vendor and supplier contracts — identify critical single-source suppliers
□ Distributor, reseller, and referral partner agreements
□ Technology and SaaS platform agreements (check assignability)
□ Office and facility leases — term, renewal options, personal guarantees, assignment clauses
□ Equipment leases — remaining obligations, purchase options
□ Any exclusivity or non-compete agreements binding on the Business
□ Any earn-out or deferred consideration agreements from prior acquisitions
□ Government and municipal contracts (special assignment requirements)
□ Any letters of intent, MOUs, or term sheets for active deals in negotiation

□ Full customer list with revenue by customer (last 3 years)
□ Customer concentration analysis — % of revenue from top 5, 10, 20 customers
□ Customer retention and churn rate (if subscription-based)
□ Signed contracts vs. month-to-month customers — what percentage is contractually secured?
□ Any customers who have indicated intent to leave or reduce spend post-sale
□ Customer lifetime value and average order/contract value trends
□ Sales pipeline and backlog (if applicable)
□ Refund rates, chargeback history, and warranty claims
□ Key sales relationships — are they to the owner personally or to the Business brand?
□ Geographic revenue distribution
□ Pricing history — any recent price increases or pressure to discount

□ Full employee list: names, titles, tenure, compensation (salary + bonus + benefits)
□ Key employee identification — who is essential to operations?
□ Turnover rate (last 3 years)
□ Employment agreements, offer letters, and compensation plans
□ Non-compete and non-solicitation agreements signed by employees
□ Any outstanding equity grants, phantom equity, or profit-sharing arrangements
□ Employee benefits summary — health insurance, 401(k), PTO policies
□ Pending or threatened employment claims, EEOC complaints, or labor disputes
□ Independent contractor arrangements — review for misclassification risk
□ Payroll records (last 12 months)
□ Workers' compensation insurance and claims history
□ I-9 verification records
□ OSHA records and safety incident history
□ Employee handbook (current version)
□ Key employee retention plans post-closing

□ Trademark registrations — U.S. and international (check USPTO and WIPO)
□ Domain name registrations — verify ownership in seller's name
□ Copyright registrations for any original works
□ Patents (pending and issued) — check USPTO
□ Trade secrets and proprietary processes — are they documented?
□ Software — owned vs. licensed; confirm license transferability
□ Social media accounts — verify ownership and transferability
□ Customer data — confirm compliance with CCPA, GDPR, and applicable privacy laws
□ Any IP licensed from third parties — review license terms for change-of-control clauses
□ Any IP infringement claims received or asserted against third parties
□ Website analytics and SEO profile (Google Search Console data)
□ Email marketing list — confirm CAN-SPAM / GDPR compliance

□ Organizational chart and reporting structure
□ Written SOPs (Standard Operating Procedures) for key processes
□ Software and technology stack — all platforms, licenses, subscriptions
□ IT infrastructure — servers, cloud providers, security posture
□ Any data breaches or cybersecurity incidents (last 3 years)
□ Supplier/vendor concentration — identify single-source dependencies
□ Inventory management system and methodology
□ Quality control procedures and return/warranty claims history
□ Business continuity and disaster recovery plans
□ Physical asset condition — request third-party equipment appraisal for assets >$50K
□ Current capacity utilization and scalability constraints
□ Geographic locations, satellite offices, storage units

□ Property owned — title search, survey, environmental Phase I assessment
□ Leased premises — full lease agreement with all amendments
□ Lease term, base rent, rent escalation clauses
□ Personal guarantee provisions — will Seller's guarantee survive or be released at closing?
□ Landlord consent requirement for lease assignment
□ CAM charges, utilities, and occupancy costs history
□ Zoning compliance for current use
□ Any deferred maintenance or capital improvements required
□ Parking and access rights

□ Federal income tax returns — 3 years (match to financial statements)
□ State income and franchise tax returns — all states with nexus
□ Sales tax filings and compliance — all states where product/service is sold
□ Payroll tax returns (Form 941) — 2 years
□ Any open tax audits, assessments, or notices
□ Transfer tax implications of deal structure (state-specific)
□ State nexus analysis — confirm no undisclosed exposure in untaxed states
□ IRS Section 1060 asset allocation implications

□ Phase I Environmental Site Assessment (for any owned or leased real property)
□ Hazardous material use, storage, and disposal records
□ EPA, state DEP, or local environmental agency permits and compliance history
□ Any underground storage tanks (USTs) — current status and prior removals
□ Prior environmental remediation activities
□ Neighboring property environmental concerns that could affect the Business