BASIC DUE DILIGENCE CHECKLIST

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					                                          BASIC DUE DILIGENCE CHECKLIST


CLIENT NAME:
Client Address:
Client Telephone:                                  Client E-Mail:

       Client Accountant/CPA
                Address:
                Telephone:                                      E-Mail:


       Client’s Broker:
                Address:
                Telephone:                                      E-Mail:




NAME OF TARGET BUSINESS (“COMPANY”):
Target Business Address:
Target Business Webpage:
Target Business Contact Representative:
       Title:
       Address:
       Telephone:                                               E-mail:


       Target Business Attorney:
                Address:
                Telephone:                                      E-Mail:
       Target Business Accountant/CPA
                Address:
                Telephone:                                                      E-Mail:


       Target Business Broker:
                Address:
                Telephone:                                                      E-Mail:



General Information about Target Business (“COMPANY”)

1.     Type of Business (Manufacturing, Retail, Service, Distribution. Restaurant, etc.):

2.     Nature of Business (What does it sell and to what sorts of customers?):



3.     Major Products or Services:

4.     Type of Business Entity (Corporation, LLC, Partnership, Sole Proprietorship etc.):

5.     Number of Owners (Shareholders, Members, etc.):

       •    Name                                                Extent of Ownership (Percentage; # of shares, etc.)




6.     Most Important Part of Business to Me:
       • Why Important?




 Teri G. Rasmussen, Plunkett Cooney, 300 East Broad Street, Suite 590, Columbus, Ohio 43215   trasmussen@plunkettcooney.com   (614) 629-3014
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7.     History of the Company and Its Business:




8.     What is REAL reason the Company is for sale?




9.     SUSTAINABILITY of Business Being Acquired:
       • What is the Company’s VISION? Is there a Business Plan?

       •    What are the Company’s CORE COMPETENCIES?

       •    Does the Company have existing STRATEGIC ALLIANCES and with whom?

       •    What part of LIFE CYCLE of business is the Company in (new entrant in marketplace, growing, mature, established,
            etc.)?

       •    What, if any, new products/services are under development? What is nature of those efforts?

       •    What, if any, new customers/clients are under development? What is nature of those efforts?

       •    How stable is the Company’s customer/client base?

       •    What is the MOST SIGNIFICANT CHALLENGE the Company faces in next 2-5 years? How prepared is Company to
            address that? What will you bring to enhance that?



PURCHASE PRICE:
    >>>Terms of Payment:

       >>> Source of Funds to Pay Purchase Price (Seller, Bank, 401(k), Venture Capital, Other):
             I      have         have not   obtained financing commitment.

 Teri G. Rasmussen, Plunkett Cooney, 300 East Broad Street, Suite 590, Columbus, Ohio 43215   trasmussen@plunkettcooney.com   (614) 629-3014
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Location of Business After Acquisition

After Purchase, Business                       will               will not remain at same location.

       •    If NEW LOCATION, please list address:


       and specify:
                            already own this property
                            intend to buy this property from                                                             .
                            already lease this property
                            intend to lease this property from                                                           .

       •    If remaining at SAME LOCATION after acquisition, Primary Business premises are
                 >>>                 Leased >>>> Name and Contact Information for Landlord:



                                     Intend to buy from Landlord
                                     Intend to continue leasing

                 >>>                 Owned by Target Business itself and I intend to                  buy          lease the real property.

                 >>>                 Owned by party affiliated with Target Business (e.g. shareholder) and
                                         I intend to      buy           lease the real property,


PARTICULAR ITEMS AND TASKS TO REVIEW AND/OR COMPLETE
No.                       Item/Task                                              Requested   Rec’d                   Comment
      LEGAL ORGANIZATION and OVERVIEW
1.    Formation Documents
      (Articles of Incorporation/Organization)
2.    Corporate Minute Book (Corporation only)
      (Stock Subscription Agreement; Stock Ledger; election of initial
      officers and directors; current officers and directors; authorization of

 Teri G. Rasmussen, Plunkett Cooney, 300 East Broad Street, Suite 590, Columbus, Ohio 43215       trasmussen@plunkettcooney.com   (614) 629-3014
                                                                                  4
      major corporate actions throughout life of corporation)
No.                           Item/Task                               Requested        Rec’d                     Comment
3.    Certificate of Good Standing/Full Force and Effect
4.    Close Corporation Agreement/Operating
      Agreement/Partnership Agreement
5.    Buy-Sell Agreement or similar exit strategy
      arrangements
6.    Lien searches in State of formation, any State in which
      significant assets exists or company does business and
      appropriate county level offices
7.    Verify licensed to do business in all relevant States.
8.    Check court records in appropriate jurisdictions to
      determine if any pending litigation against company or
      its principals.


      FINANCIAL STATEMENTS
1.    Financial statements for previous three years
      (Balance Statement, Income Statement/P&L, Cash
      Flow/Sources and Uses of Cash)
2.    Federal, state, and local tax returns of business for
      previous three years.
3.    Interim financial statements (monthly or quarterly) for
      current and previous year
4.    Projected Operating and Financial Forecasts
5.    Accounts Receivable Analysis and Aging Reports
6.    Accounts Payable Analysis and Aging Reports
7.    Determine current amount and nature of Indebtedness
      to banks, secured creditors, and equipment lessors, as
      well as status/nature of current relationship
8.    Determine reliability of Company’s internal and external
      financial reporting
9.    Projected Capital Expenditures in next two years
10.   Determine any cyclical influences on Company revenue
      or expenses
11.   Discuss general accounting policies (revenue
      recognition etc.)



 Teri G. Rasmussen, Plunkett Cooney, 300 East Broad Street, Suite 590, Columbus, Ohio 43215   trasmussen@plunkettcooney.com   (614) 629-3014
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No.                             Item/Task                             Requested        Rec’d                     Comment
      ASSETS INCLUDED IN SALE
1.    List of all real properties, leased or owned, with
      description of use by Company
2.    Detailed list of all major machinery and equipment,
      vehicles, and other personal property items of
      significant value on financial statements
               • Verify whether in working order
               • If leased, obtain copies of lease agreement
3.    List of all (issued OR pending) patents, trademarks,
      copyrights, licenses, or other intellectual property or
      proprietary rights owned by Company OR used in the
      operation of its business
               • If not owned by the Company, determine
                    procedure for continuing usage rights
               • Any disputes or infringements claims?
4.    Detailed list of all contracts and their key terms,
      including duration and any upcoming expirations
           • Suppliers/Vendors
           • Distributors
           • Employees/Independent Contractors
           • Customers
           • Management Companies
           • Affiliates of Company
5.    Determine condition of real and personal property –
      physical inspection is IMPERATIVE
6.    Review surveys, title policies or commitments, and
      environmental reports if available


      EMPLOYEES
1.    Identify key employees/Evaluate current management
      team; responsibilities of same
2.    Company policies concerning hiring, compensation,
      advancement and termination, whether written or
      “customary”
         • Compare with those elsewhere in industry

 Teri G. Rasmussen, Plunkett Cooney, 300 East Broad Street, Suite 590, Columbus, Ohio 43215   trasmussen@plunkettcooney.com   (614) 629-3014
                                                                       6
No.                              Item/Task                               Requested        Rec’d                     Comment
3.       Written HR policies and records, including payroll (e.g.
         wage, commission, and bonus structure) information,
         employee handbook, vacation and sick leave policies,
         health insurance, profit-sharing, retirement, and other
         benefits offered.
             • Compare with those elsewhere in industry
4.       Determine employee turnover and competence level;
         departures of any officers or key employees in last
         year?
5        Contractual arrangements, if any, with any employee or
         independent contractor, including any confidentiality or
         non-compete agreements or union collective
         bargaining agreements
.

         BUSINESS OPERATIONS
1.       Customer List, with special emphasis on information
         about top 15 customers in last three years
2.       List of top 10 Suppliers/Vendors
3.       Brief description of any key relationships severed in the
         last two years and reason for termination of relationship
4.       Quality/obsolescence of technology being used by
         Company and its employees
5.       Marketing and Sales Strategies; Distribution Channels
6.       Relative Place in Marketplace – what is competition?/
         Comparative strengths and weaknesses of Company
7.       Franchise Agreement, FDD, and related
         documentation, if applicable
8.       Insurance Coverages
9.       Warranty policies; pending issues or claims
10.      Applicable regulatory requirements
11.      List of governmental or nongovernmental licenses or
         permits required to operate business
12.      Determination of any significant contingent liabilities
         (e.g. employee workplace safety, environmental issues,
         product liability claims, product safety concerns, warranty
         issues, etc.)

    Teri G. Rasmussen, Plunkett Cooney, 300 East Broad Street, Suite 590, Columbus, Ohio 43215   trasmussen@plunkettcooney.com   (614) 629-3014
                                                                          7
No.                           Item/Task                              Requested        Rec’d                     Comment
13.   Location of Company depository bank accounts and
      other banking relationships
14.   Prospects of, and Issues facing, industry as a whole
15.   Adequacy of Production Facilities
          • Ability to handle anticipated volumes
          • Whether projected costs of new facilities and
               equipment is consistent with anticipated cash
               flow
16.   List of any threatened litigation against the Company in
      the last two years




Teri G. Rasmussen, Plunkett Cooney, 300 East Broad Street, Suite 590, Columbus, Ohio 43215   trasmussen@plunkettcooney.com   (614) 629-3014
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