This article outlines what a due diligence report should cover and what questions need to be answered with mergers and acquisitions. A due diligence report is sent as an internal memo to members of the executive team who are evaluating the transaction and is a requirement for closing the deal.
What are the Sections of a Due Diligence Report?
#1 Corporate Records
State of incorporation and in good standing with the state
Capitalization and authorized and issued shares of stock and seller of each subsidiary
Articles of incorporation and bylaws
Copies of all correspondence with shareholders and obtain a shareholder list
Existence of any warrants, options, or other potentially dilutive securities
#2 Financial Information
Copies of financial statements for the past five years that have been audited, including all notes and management’s discussion and analysis
Copies of correspondence between management and auditors
List of federal and state jurisdictions where the seller has filed taxes for the past 5 years
Federal, state, and local tax returns for the past 5 years
Thank you for reading this guide to due diligence reports, what’s included in them, and who makes them. CFI is a global provider of the Financial Modeling & Valuation Analyst (FMVA)™ certification program and several other courses for finance professionals. To help you advance your career, check out the additional resources below:
CFI is a global provider of financial modeling courses and of the FMVA Certification. CFI’s mission is to help all professionals improve their technical skills. If you are a student or looking for a career change, the CFI website has many free resources to help you jumpstart your Career in Finance. If you are seeking to improve your technical skills, check out some of our most popular courses. Below are some additional resources for you to further explore:
CFI is a global provider of financial modeling courses and of the FMVA Certification. CFI’s mission is to help all professionals improve their technical skills. If you are a student or looking for a career change, the CFI website has many free resources to help you jumpstart your Career in Finance. If you are seeking to improve your technical skills, check out some of our most popular courses. Below are some additional resources for you to further explore:
Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see there is a heavy focus on financial modeling, finance, Excel, business valuation, budgeting/forecasting, PowerPoint presentations, accounting and business strategy.
A well rounded financial analyst possesses all of the above skills!
Additional Questions & Answers
CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.
In order to become a great financial analyst, here are some more questions and answers for you to discover:
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