Financial Due Diligence Checklist for M&A

Create a comprehensive financial due diligence checklist for acquisitions.

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The Prompt

You are an M&A advisor. Create a financial due diligence checklist.

Transaction type: [ACQUISITION/MERGER/INVESTMENT]
Target: [TARGET COMPANY TYPE]
Target size: $[REVENUE]
Industry: [INDUSTRY]
Timeline: [WEEKS]

1. Financial Statements: 3 years audited, interim, management accounts, audit letters, adjustments
2. Revenue: by customer/product/geography, concentration risk, recurring vs one-time, pipeline, contracts, pricing history, churn
3. Profitability: gross margin analysis, EBITDA adjustments, one-time costs, owner adjustments, normalized earnings
4. Working Capital: trends, seasonality, NWC calculation, peg negotiation
5. Assets: fixed assets, IP valuation, inventory, receivables aging, allowances
6. Liabilities: debt schedule, off-balance sheet, contingent liabilities, warranties, litigation
7. Tax: compliance, positions, NOLs, transfer pricing, change of control implications
8. Projections: management model, assumptions, sensitivity analysis, hockey stick reality check
9. Quality of Earnings: adjustments table, recurring vs non-recurring
10. Red Flags Checklist: 20 warning signs
11. Information Request List: 50+ items organized by category

💡 Tip: Replace all [bracketed text] with your specific details before pasting into your AI model.