{"id":625,"date":"2021-02-05T01:29:20","date_gmt":"2021-02-05T01:29:20","guid":{"rendered":"http:\/\/wutif.ca\/?p=625"},"modified":"2021-02-05T01:29:20","modified_gmt":"2021-02-05T01:29:20","slug":"due-diligence-checklist","status":"publish","type":"post","link":"https:\/\/wutif.ca\/index.php\/2021\/02\/05\/due-diligence-checklist\/","title":{"rendered":"Due Diligence Checklist"},"content":{"rendered":"<h1>Due Diligence Checklist<\/h1>\n<h2>1.\u00a0\u00a0\u00a0\u00a0 Corporate Structure and Corporate History<\/h2>\n<ul>\n<li>Articles of incorporation<\/li>\n<li>Corporate by-laws and operating agreements<\/li>\n<li>Minutes of Board of Directors and Shareholder meetings<\/li>\n<li>Past and Current Shareholders Agreements<\/li>\n<li>All other documents provided to directors and shareholders<\/li>\n<li>Board of Directors\n<ul>\n<li>Members (Experience and Skills)<\/li>\n<\/ul>\n<\/li>\n<li>Business Advisory Board\n<ul>\n<li>Members (Experience and Skills)<\/li>\n<\/ul>\n<\/li>\n<li>Officers of the Company<\/li>\n<li>Legal Counsel<\/li>\n<li>Auditor<\/li>\n<\/ul>\n<h2>2.\u00a0\u00a0\u00a0\u00a0 Financial Information<\/h2>\n<ul>\n<li>Annual financial information since inception\n<ul>\n<li>Audited income statements, balance sheets, cash flows, and footnotes<\/li>\n<li>Extraordinary income or expense details<\/li>\n<li>Explanation of any material write-down or write-offs<\/li>\n<li>Summary of bad debt experience<\/li>\n<\/ul>\n<\/li>\n<li>Current Financials\n<ul>\n<li>Financial statement and trial balance current to previous month end<\/li>\n<li>Accounts receivable and accounts payable aging schedule<\/li>\n<li>Current backlog by customer<\/li>\n<li>Details of any outstanding contingent liabilities<\/li>\n<li>Bank statements for prior six months<\/li>\n<\/ul>\n<\/li>\n<li>Financial Projections\n<ul>\n<li>Up to date business plan<\/li>\n<li>Financial plan for the next three fiscal years\n<ul>\n<li>Revenue by product type, customers, and channel<\/li>\n<li>Income statements, balance sheets, cash flow by month<\/li>\n<li>Major growth drivers and prospects<\/li>\n<li>Predictability of business<\/li>\n<li>Explanation of seasonality of business<\/li>\n<li>Industry and company pricing policies<\/li>\n<li>Economic assumptions underlying projections (different scenarios based on price and market fluctuations)<\/li>\n<li>Explanation of projected capital expenditures, depreciation, and working capital arrangements<\/li>\n<li>Expectation of and need for external funding\n<ul>\n<li>Amount of and sources for external funding being sought, including other potential investors being courted<\/li>\n<li>Expectation of grants and other non-dilutive (e.g. government) funding during next three years<\/li>\n<\/ul>\n<\/li>\n<li>Capital Structure\n<ul>\n<li>Current shares outstanding, including nature of different classes of shares<\/li>\n<li>List of all stockholders with shareholdings, options, warrants, or notes\n<ul>\n<li>For non-arms length investors: relationship to founders or principals, any experience relevant to company, any expectation for advice or contributing role<\/li>\n<li>For arms-length investors: business experience, prior investment experience, any expectations for advice or contributing role<\/li>\n<\/ul>\n<\/li>\n<li>Schedule of all options, warrants, covenants, rights, and any other potentially dilutive securities with exercise prices and vesting provisions<\/li>\n<li>Summary of all debt instruments\/bank lines with key terms and conditions<\/li>\n<li>Off balance sheet liabilities<\/li>\n<\/ul>\n<\/li>\n<li>Other financial information\n<ul>\n<li>Schedule of financing history for equity, warrants, and debt (date, investors, dollar investment, percentage ownership, implied valuation and current basis for each round)<\/li>\n<li>Summary of current federal, provincial and foreign tax positions, including net operating loss carry-forwards<\/li>\n<li>Discuss general accounting policies (revenue recognition, etc.)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>3.\u00a0\u00a0\u00a0\u00a0 Products<\/h2>\n<ul>\n<li>Description of each product\n<ul>\n<li>Major customers and applications<\/li>\n<li>Historical and projected growth rates<\/li>\n<li>Market share<\/li>\n<li>Speed and nature of technological change<\/li>\n<li>Timing of new products, product enhancements<\/li>\n<li>Cost structure and profitability<\/li>\n<li>Cost and other liabilities for any warranties or need for customer support<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>4.\u00a0\u00a0\u00a0\u00a0 Competition<\/h2>\n<ul>\n<li>Description of the competitive landscape within each market segment including:\n<ul>\n<li>Market position and related strengths and weaknesses as perceived in the market place<\/li>\n<li>Basis of competition (e.g. price, service, technology, distribution)<\/li>\n<\/ul>\n<\/li>\n<li>Defences against competition within each market segment or product<\/li>\n<li>Primary market research conducted by Company<\/li>\n<li>Secondary market research\n<ul>\n<li>Survey of each market segment<\/li>\n<li>Economic and regulatory trends affecting each market segment<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>5.\u00a0\u00a0\u00a0\u00a0 Marketing, Sales and Distribution<\/h2>\n<ul>\n<li>Strategy and implementation\n<ul>\n<li>Discussion of North American and international distribution channels<\/li>\n<li>Positioning of the Company and its products<\/li>\n<li>Marketing opportunities\/marketing risks<\/li>\n<li>Description of marketing programs and examples, if any, of recent marketing\/product\/public relations\/media information on the Company<\/li>\n<\/ul>\n<\/li>\n<li>Major Customers and Partners\n<ul>\n<li>Status and trends of relationships<\/li>\n<li>Prospects for future growth and development<\/li>\n<li>Pipeline analysis<\/li>\n<\/ul>\n<\/li>\n<li>Principal avenues for generating new business<\/li>\n<li>Sales force model\n<ul>\n<li>Compensation<\/li>\n<li>Sales Cycle<\/li>\n<\/ul>\n<\/li>\n<li>Ability to implement marketing plan with current and projected budgets<\/li>\n<\/ul>\n<h2>6.\u00a0\u00a0\u00a0\u00a0 Research and Development<\/h2>\n<ul>\n<li>Description of R&amp;D organization\n<ul>\n<li>Strategy<\/li>\n<li>Key personnel<\/li>\n<li>Major activities<\/li>\n<\/ul>\n<\/li>\n<li>New Product Pipeline\n<ul>\n<li>Status and timing<\/li>\n<li>Cost of development<\/li>\n<li>Critical technology necessary for implementation<\/li>\n<li>Risks<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>7.\u00a0\u00a0\u00a0\u00a0 Management and Personnel<\/h2>\n<ul>\n<li>Organization chart<\/li>\n<li>Historical and projected headcount by function and location<\/li>\n<li>Summary biographies of senior management, including employment history, age, service with the Company, years in current position\n<ul>\n<li>Compensation arrangements\n<ul>\n<li>Copies (or summaries) of key employment agreements<\/li>\n<li>Benefit plan<\/li>\n<\/ul>\n<\/li>\n<li>Discussion of incentive stock plans<\/li>\n<li>Copies of non-disclosure agreements and non-competition agreements if not already part of employment agreement<\/li>\n<li>Significant employee relations problems, past or present<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>8.\u00a0\u00a0\u00a0\u00a0 Legal and Related Matters<\/h2>\n<ul>\n<li>Pending lawsuits against the Company (detail on claimant, claimed damages, brief history, status, anticipated outcome, and name of the Company\u2019s counsel)<\/li>\n<li>Pending lawsuits initiated by the Company (detail on defendant, claimed damages, brief history, status, anticipated outcome, and name of Company\u2019s counsel)<\/li>\n<li>List of material patents, copyrights, licenses, trade secrets, trademarks and domain names\n<ul>\n<li>Status of application (issued and pending)<\/li>\n<li>Jurisdiction of application<\/li>\n<li>Copies of filed patents<\/li>\n<li>Assignments of patents by founders to Company or licensing agreements between founders and Company<\/li>\n<\/ul>\n<\/li>\n<li>Summary of insurance coverage\/any material exposures<\/li>\n<li>Summary of material contracts\n<ul>\n<li>Long-term capital contracts<\/li>\n<li>Contracts with consultants, agents, distributors, partners, etc.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Due Diligence Checklist 1.\u00a0\u00a0\u00a0\u00a0 Corporate Structure and Corporate History Articles of incorporation Corporate by-laws and operating agreements Minutes of Board of Directors and Shareholder meetings Past and Current Shareholders Agreements All other documents provided to directors and shareholders Board of Directors Members (Experience and Skills) Business Advisory Board Members (Experience and Skills) Officers of the &hellip; <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/wutif.ca\/index.php\/wp-json\/wp\/v2\/posts\/625"}],"collection":[{"href":"https:\/\/wutif.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wutif.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wutif.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/wutif.ca\/index.php\/wp-json\/wp\/v2\/comments?post=625"}],"version-history":[{"count":1,"href":"https:\/\/wutif.ca\/index.php\/wp-json\/wp\/v2\/posts\/625\/revisions"}],"predecessor-version":[{"id":626,"href":"https:\/\/wutif.ca\/index.php\/wp-json\/wp\/v2\/posts\/625\/revisions\/626"}],"wp:attachment":[{"href":"https:\/\/wutif.ca\/index.php\/wp-json\/wp\/v2\/media?parent=625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wutif.ca\/index.php\/wp-json\/wp\/v2\/categories?post=625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wutif.ca\/index.php\/wp-json\/wp\/v2\/tags?post=625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}