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
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
- 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
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
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.