by Geofferey Pagel

published October, 2015

So what exactly is due diligence? Well the exact definition is “reasonable steps taken by a person in order to satisfy a legal requirement, especially in buying or selling something”. The less formal definition is basically just ensuring that all your paper work is in order.

 

What this means for your company is that all the following documents must be in place:List of Assets with

Market Value and Book Value

List of Debts long term and short term

  • Which Assets are encumbered?
  • What is the outstanding capital?
  • What is the period remaining?
  • What is the interest rate?
  • Is there penalty free early settlement?
  • Net Asset value of Company

Insurance

List of written and oral Contracts

  • Confidentiality agreement
  • Value (turnover) per contract

Balance sheets, income and cash flow statements for the last 2 years

Management accounts to date, including turnover, gross profit, insurance, depreciation, tax and net profit

Organogram of company structure

Copies of the acquisition and associated agreements

Business plan

Property leases

  • Total space
  • Occupied space
  • Individual leases

Employee and director service agreements
Post retirement information
Sales / Supplier contracts
Labor consulting issues for the previous year
Last three years financial statements
A schedule of personal expenditure currently being expensed through the business
A schedule of assets not required for the operation of the business
Management accounts for the last 6 months
Details of loan agreements
Finance agreements
Last available tax return
Last available statutory returns, WCA, PAYE, VAT, UIF, etc.
Profit and cash flow forecasts
Schedule of key assets and liabilities
List of key debtors
List of key creditors
Debtors ageing for the last two years
Group organisational structure
Details of fleet – age, size, replacement strategy, fuel and maintenance costs
Outstanding liabilities
Minutes of meetings
Last available audit files

Your secretary or company secretary should have all these documents in a file called a statutory file with the following tabs; Correspondence, accounts, annual returns, company register, name and nature, Directors and officers, auditor, address, memos and articles, resolutions and meetings, bank and shares.

Anchor Business Solutions will happily do any due diligence you require, on big or small companies, we have several years of experience in this field and we are fast and efficient.

Anchor Business Solutions. For all your fiduciary, company secretarial, administration, payroll and corporate social investment (CIS) needs.