DUE DILIGENCE CHECKLIST

NIGEL A.L. BROOKS THE BUSINESS LEADERSHIP DEVELOPMENT CORPORATION

DUE DILIGENCE CHECKLIST

The due diligence package is a set of documentation prepared by an enterprise for review by potential investors and lenders. It can also be used for establishing a baseline for strategic planning and profit improvement initiatives. The checklist for the package includes:

Enterprise  Governance

Legal form of holding entity and subsidiary entities
    

Articles of incorporation Charter By-laws Certificate of incorporation Certificate of good standing
 

State of incorporation Foreign authorizations

♦ ♦ ♦

DBA/fictitious names Tradenames Licenses and authorizations
  

Business Professional Sales and use tax

2

Management
  

Major shareholders Directors Officers

♦ ♦

Relevant board minutes and resolutions Organization charts

Capitalization

Equity capital
     

Schedule of shares authorized, issued, outstanding , and float by class and series Schedule of shareholders Schedule of warrants and options and vesting schedules Stock purchase agreements Stock warrant agreements Stock option agreements
 

Qualified Non qualified

  ♦

Restricted stock agreements and vesting schedules SEC filings

Debt capital
  

Schedule of debt Schedule of debt holders Indentures

3

Schedule of assets
 

Inventory Investment capital assets with appraisals
 

Facilities (land and buildings) Equipment

Plans and reports
♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦

Strategic Business plan for financing Operational Financial Private placement memoranda Prospectuses and registration statements Audited or compiled financial statements Annual reports to shareholder investors Schedule of key:
    

Employees Customers Suppliers Investors Competitors

Intellectual property
♦ ♦ ♦ ♦

Patents Trademarks, trade names, and service marks Copyrights License agreements
 

Licensed from Licensed to

4

Research and development
♦ ♦ ♦

Description of capability Feasibility studies and proofs of concept Major projects

Marketing and product materials and descriptions
♦ ♦ ♦ ♦ ♦ ♦

Articles and press releases Brochures Advertisements Websites Product specifications Warranties and service contracts

Insurance
♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦

Schedule of carriers and policy premiums, terms, limits, claims and settlements Key man Director and officer Business liability Product liability Property and casualty Errors and omissions Workers compensation Health Self insurance through a captive insurance company

Litigation
♦ ♦

Pending actions Orders, decrees, and judgments

5

Merger and acquisition activity
♦ ♦ ♦

Business valuations Outstanding offers Rejected offers

 

Professional service r Relationships
♦ ♦ ♦ ♦

Attorneys Accountants and auditors Consultants Financial institutions
   

Commercial banks Investment banks Insurance companies Finance companies

♦ ♦ ♦

Marketing and public relations Factoring companies Collection agencies

Strategic alliances
♦ ♦ ♦

Joint ventures Distributor relationships Insourcing and outsourcing

6

Employees         Schedule of employees Schedule of compensation and benefits Profit sharing and pension plans Labor agreements Employee loan agreements Contracts Employee handbook Job descriptions

Customers  Receivables
♦ ♦ ♦

Schedule of aged receivables Schedule of customers, terms, amounts owing., and guarantors Schedule of leases

  

Proposals and major orders outstanding from Contracts UCC filings

7

Suppliers  Credit and leases
♦ ♦ ♦ ♦

Schedule of aged payables Schedule of creditors, terms, amounts owing, and guarantees Schedule of leases Contracts
 

Unsecured debt and short-term borrowings Secured debt
  

Real-estate Vehicles Other

Leases

Operating
  

Vehicles Other equipment Facilities

Capital

 

Proposals and major orders outstanding to UCC filings

Investors   Debt Equity

8

Regulators  Tax filings
♦ ♦ ♦ ♦ ♦

Income tax returns Employment tax returns Sales and use tax returns Property tax returns Tax audit reports

Other regulatory reports
♦ ♦

Environmental
Professional

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For more information... For information about the due diligence services offered by The Business Leadership Development Corporation visit: www.bldsolutions.com

For information about audiobooks, books, earticles, ebooks, and eseminars offered by The Business Leadership Development Corporation visit www.etailia.com For more information about the discipline of enterpriship visit www.enterpriship.com To assess your individual competencies in thirty minutes or less, claim your opportunity for instant access when you go to www.individualcompetencies.com

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About Nigel A.L Brooks... Nigel A.L Brooks is a management consultant to entrepreneurs, business enterprise owners, executives, and managers, and the enterprises they serve. He specializes in developing the entrepreneurial, leadership, and managerial competencies that build sustainable advantage from vision to value. He is an author and a frequent speaker. He obtained his professional experience as a partner at Andersen Consulting (now Accenture, Ltd.), as a vice president at Booz Allen Hamilton, Inc. (now Booz and Company), as a senior vice president at the American Express Company, as president of Javazona Cafes, Inc., and as president of The Business Leadership Development Corporation. He has been a contributing editor for the Bank Administration Institute magazine, and has served on boards of entrepreneurial networks. He was educated at the University of Exeter, Devon, United Kingdom. His clients are in the financial services, food services, high-tech, manufacturing and distribution, pharmaceuticals, oil and gas, professional services, retail and wholesale, transportation, and government industries. He has experience in North and Latin America, Europe and Asia-Pacific. www.nigelalbrooks.com About The Business Leadership Development Corporation (BLD)... The Business Leadership Development Corporation is a professional services firm that works with entrepreneurs, lifestyle business enterprise owners, executives, and managers, and the enterprises they serve. BLD develops entrepreneurial, leadership, and managerial competencies that achieve performance excellence by building sustainable advantage from vision to value through:     Strategic Management Consulting Executive Coaching and Mentoring Professional Training via The Center For Business Leadership Development (CBLD) Motivational Speaking www.bldsolutions.com

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THE BUSINESS LEADERSHIP DEVELOPMENT CORPORATION 13835 NORTH TATUM BOULEVARD 9-102 PHOENIX, ARIZONA 85032 USA www.bldsolutions.com (602) 291-4595 © Copyright 2008-10: The Business Leadership Development Corporation All rights reserved

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