financial due diligence checklist

Financial Due Diligence Checklist

What is Due Diligence?

Due Diligence is vital in the financial world, specifically in the success of a transaction. It focuses on providing potential investors with an understand of a company’s earnings, historic sales and operating expense trends, and historical working capital needs. The process involves examining a company’s numbers, comparing the numbers over time, and benchmarking them against competitors. In the financial world, due diligence requires an examination of financial records before entering a proposed transaction with another party.

Why is Due Diligence Important?

Due diligence provides investors with trust knowing that your financials are clean. It is is a systematic way to analyze and mitigate risk from a business or investment decision.  It is essential element to a successful transaction and to gain funding from investors. This process will allow the buyer to assess the value of the business and verify the information to determine whether they will proceed with the purchase, funding or whatever it may be.

The due diligence period, which typically takes anywhere from two weeks to one month, can also let the buyer determine the barriers or risks associated with the transaction. It helps investors and companies understand the nature of a deal, the risks involved, and whether the deal fits with their portfolio. Essentially, undergoing due diligence is like doing “homework” on a potential deal and is essential to informed investment decisions.

Due Diligence Checklist

  1. Business & Operational Docs:
    • Pitch Decks
    • Road Maps
  2. Legal Docs
    • Articles of Incorporation
    • Corporate Bylaws
  3. Capitalization:
    • Cap table
    • Term sheets
  4. Financial Statements & Projections:
    • Financial Statements (last 1-2 yrs.)
    • Financial Projections (next 2 yrs.)
    • Financial Models (current/previous yr.)
    • Financial Liabilities, Loans or Encumbrances (current period)
    •  Statements of Comprehensive Loss (last 1-2 yrs.)
  5. Agreements & Contracts:
    • Buy-sell
    • Intellectual Property documents
    • Leases
    • Contracts & Invoice for Top Clients
    • Material Contracts
  6. Organization & Hiring
    • Corporate Policies and Training Information
    • Org Chart
    • Team Bios
    • Hiring Roadmap (next 2 yrs.)


NOW CFO expert consultants can assist with all due diligence related efforts (buyer and seller) before and during a sale. Our consultants can perform the due diligence based upon our structured approach or under your direction providing investment banks, PE groups, and VC firms with the opportunity to maintain lean acquisitions groups and leverage resources as needed.

Whether you are an experienced investor or working on your first acquisition, our diligence teams can provide you with the diligence required for your investment decisions. NOW CFO consultants will approach your acquisition or merger with the single focus of creating shareholder value.

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