M&A Due Diligence Checklist.

The numbers the price is built on. Clean, reconciled financials keep the multiple you were offered at LOI.

• Three years of accounts, plus year-to-dateCriticalProfit and loss, balance sheet and cash flow, reconciled to filed or audited accounts.
• Monthly management accounts for the last 24 monthsCriticalSame chart of accounts throughout, so a buyer can see seasonality and trend.
• Add-backs and normalisation scheduleCriticalEvery owner cost and one-off item, with the evidence behind it.
• Revenue by customer, product and monthExported from billing, matching the P&L to the cent.
• Working capital historyMonthly debtors, creditors, deferred revenue and stock, to agree a fair peg.
• Debt, leases and off-balance-sheet itemsLoan agreements, guarantees, leases and any earn-outs you owe.
• Budget and forecast with assumptionsCurrent year budget against actuals, plus a simple driver-based forecast.

Buyers pay for income that repeats. Showing retention and spread proves it.

• Top 20 customers with revenue shareCriticalContract start, renewal date and share of revenue for each.
• Retention and churn by cohortCriticalGross and net revenue retention by month or year of signing.
• Pipeline and bookings reportStage, value and close date, with historic win rates.
• Pricing history and discount policyPrice list changes and who can approve discounts.
• Supplier and channel dependenciesKey suppliers, platforms and partners, with their contract terms.
• Market and competitor summaryOne page on who you win against and why.

Clear ownership and clean contracts let a buyer sign without extra protections that hold back your cash.

• Cap table and share registerCriticalEvery shareholder, option and convertible, matching the company register.
• Material contracts with change-of-control terms flaggedCriticalCustomers, suppliers and partners where a sale needs consent or triggers a right.
• Constitutional documents and board minutesArticles, shareholder agreements and minutes for the last three years.
• Litigation, claims and disputes logOpen, threatened and settled matters, with likely cost.
• Standard customer termsCurrent template and any customers on non-standard paper.
• Insurance policies and claims historyCover levels, renewal dates and anything claimed.

Tax is where buyers ask for indemnities and escrow. Tidy filings shrink both.

• Corporate tax returns and computationsCriticalLast three years, with correspondence from the tax authority.
• Sales tax, VAT or GST registrations and returnsCriticalEvery country and state where you sell, including digital services.
• Payroll tax and contractor statusEvidence that contractors are correctly classed.
• R&D credits and grants claimedClaims, approvals and any clawback conditions.
• Transfer pricing for group entitiesIntercompany agreements and how charges are set.

Buyers are buying the team as much as the product. Showing who stays and why protects the deal.

• Org chart and employee censusCriticalRole, start date, salary, bonus, notice period and location for everyone.
• Employment contracts and key termsSigned contracts, with restrictive covenants for senior staff.
• Equity and bonus plansPlan rules, grants, vesting and what happens on a sale.
• Key-person planWho the business depends on, and how that knowledge is shared.
• Pensions, benefits and HR policiesScheme details and the handbook.

For digital businesses the code and the brand are the asset. Proving you own them outright is worth real money.

• IP assignments from every founder, employee and contractorCriticalSigned assignments covering everyone who built the product.
• Open-source licence scanCriticalA scan report with any copyleft components and how they are used.
• Architecture overview and hosting costsOne diagram plus monthly infrastructure spend.
• Trademarks, domains and app store accountsRegistrations held in the company name, not a founder’s.
• Security posture and incident historyPen test, certifications (SOC 2, ISO 27001) and any breaches.
• Product roadmap and technical debt notesWhat is planned and what needs work.

Licences and data compliance can need approvals before closing. Knowing early sets a realistic timetable.

• Licences and permits heldCriticalEvery licence, its holder and whether a change of control needs approval.
• Data protection recordsCriticalPrivacy policy, records of processing, data processing agreements and transfer mechanisms.
• Sector compliance evidenceFor example PCI DSS, AML procedures or gaming compliance reports.
• Correspondence with regulatorsInspections, findings and how they were closed.