Sample Due Diligence Checklist: Are You Data Room Ready?

Roughly half of all M&A deals that enter the formal due diligence process never reach a final transaction.

Also read: Diligence Techniques for Maximizing M&A Synergies

Though numerous factors can kill a deal, the seller’s ability to effectively drive the process forward is vital to success. The buyer’s requests must be met with timely, truthful, well-organized information. Communication to the buyer must be punctual and consistent. Anything less can harm the seller’s credibility and weaken the buyer’s confidence in the business.

Leading an exit is a rigorous process comparable to a second full-time job for a portfolio company management team. How well the team managed, organized and tracked the business during regular operations dictates exactly how grueling the journey will be. PE-backed CXOs who consistently drive high levels of organization, documentation and discipline enter the process more “data room ready” than their counterparts.

Below is a sample due diligence checklist that a buyer may provide to a seller. Consider it a reference point for the approximate depth/breadth associated with the exit process. A seller’s ability to quickly meet information requests (and field inevitable follow-ups from the buyer) can have a meaningful impact on the likelihood of a successful exit as well as the exact valuation.

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