Checklist for Acquisition of a Private Company

CHECKLIST FOR ACQUISITION

OF A

PRIVATE COMPANY

Accounting and Financial

1.

Coor Coordi dina nate te with with inte intern rnal al acco account untin ing g sta staff ff and outs outsid idee aud audit itor ors. s.

2.

Addr Addres esss any any upda updattes to fi financ nanciial stat statem emen ents ts..

3.

Coord ordinate wi wire tr transfer pr proce ocedures.

4.

Coor Coordi dina natte inv inves esttment ent of of pr procee oceeds ds from sal sale.

5.

Assist Assist in develo developin ping g resp respons onses es to Buyer Buyer reques requests, ts, if any, any, for for more more deta detaile iled d fina financi ncials als..

6.

Care Carefu full lly y revi review ew sell seller er’s ’s fina financ ncia iall stat statem emen ents ts..

7.

Prop Proper er acco account untin ing g tre treat atme ment nt and and reve revenu nuee reco recogni gniti tion on by sell seller er??

8.

Audi Audite ted d fina financ ncia iall stat statem emen ents ts and and aud audit itor or rep repor orts ts ava avail ilab able le??

9.

Audit ditor manag nagement le letters av available?

10.

Asset review.

11.

Liabilities re review.

12.

Accoun ounts re receivable ble re review.

13.

Accoun ounts payable revie view.

14.

Inventory re review.

15. 15.

Cash Cash posi positi tion on and and requ requir irem emen ents ts revi review ew..

16.

Loan review.

17.

Unfunded ded pe pension cost re review.

18. 18.

Cont Contiingen ngentt li liabi abiliti ities revie eview. w.

19. 19.

Pros Prospe pect ctiv ivee fina financ ncia iall info inform rmat atio ion: n: (a ) Earnings pr projection. (b) (b) Proj Projec ecttion ion of of cas cash req requi uirremen ements ts.. (c) (c) Proj Projec ectted fina financ nciial stat statem emen ents ts.. (d) (d) Unde Underl rlyi ying ng assu assump mpti tion onss and and key key fact factor ors. s. (e ) Capit pital and and operating bu budge dgets. (f) Long-term plans.

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Agreement Preparation

1.

Confidentiality Agreements

2.

Asset or or St Stock Sa Sale Ag Agreement

3.

Assignme nment & Assumpti ption Ag Agreements

4.

Real Real Esta Estate te Purc Purcha hase se Agre Agreem ement entss (if (if not incl include uded d in in the the main main Agre Agreem ement ent))

5.

Envi Enviro ronm nmen enta tall Agr Agreem eemen entt (if (if not not inc inclu lude ded d in in the the main main Sale Sale Agre Agreem ement ent))

6.

Bill Billss of of Sale Sale (and (and othe otherr inst instru rume ment ntss of tran transf sfer er))

7.

Schedules to Agreements

8.

Opinions of Counsel

9.

Officer’s Certificate

10.

Compliance Certificate ates

11.

Develop Develop appropr appropriat iatee purc purchas hasee pri price ce adjust adjustmen mentt mech mechani anism, sm, if necess necessary ary

12. 12.

Dete Deterrmine mine Posit ositiion on Key Key Poi Point nts: s: (a ) Repre presentations an and war warranties (b) (b) Scop Scopee of indem indemni nifi fica cati tion: on: cap/ cap/ti time me to asse assert rt/b /bas asket ket (c) (c) Liab Liabil ilit itie iess to to be be ret retai aine ned/ d/as assu sume med d by by buy buyer er (d) Conditions to to cl closing (e) (e) Damag Damages es claus clausee in in the the even eventt of of fail failur uree of of buy buyer er to clos closee (f) (f) Trea Treattment ment of empl employ oyee eess & bene beneffit plan planss (g) (g) PrePre-cl clos osin ing g res restr tric icti tive ve cov coven enan ants ts of sell seller er (h) (h) Cove Covena nant ntss of of buy buyer er (suc (such h as as acc acces esss to to rec recor ords ds)) (i) Post-closing transition (j) (j) As-i As-iss sale sale with with all all fault faults? s? – disc discla laim imer erss of repr repres esen enta tati tions ons or or warra warrant ntie ies? s? (k) Assump Assumptio tion n by buyer buyer of of desig designat nated ed exist existing ing contra contracts cts (serv (service ice as well well as sale sales). s). (l) Buyer’ Buyer’ss coop coopera eratio tion n if seller seller intends intends to comp complet letee tran transac sactio tion n as part part of of a tax free free exchange. (m) Risk Risk of loss loss prior prior to to closin closing g (casua (casualty lty,, condemn condemnati ation) on) – mater material iality ity stan standar dard. d. (n) (n) Cons Consen ents ts and and appr approv oval alss of thir third d part partie iess (o) Prorat Proration ion and allocat allocation ion of clos closing ing costs: costs: transf transfer er taxe taxes, s, escr escrow ow fees fees,, title title insurance premiums, recording fees. (p) (p) Assu Assump mpti tion on by buyer buyer of vario various us defe deferr rred ed oblig obligat atio ions ns?? (q) Arbitration clause. (r) Non-compete pr provision. (s) Supply agreements.









Antitrust and Regulatory

1.

Dete Determ rmin inee perm permit itte ted d scop scopee of disc disclo losu sure re of info inform rmat atio ion n to comp compet etit itor orss

2.

Dete Determ rmin inee alloc allocat atio ion n of anti antitr trus ustt risk risk,, incl includ udin ing g selle sellerr posit positio ions ns in in the eve event nt of 2nd 2nd request under HSR Act or injunction. Payment from bidder if anti-trust problem forces cancellation?

3.

Anal Analyz yzee scop scopee of any any ant antit itru rust st issu issues es with with vari variou ouss bid bidde ders rs

4.

Prep Prepar aree Hart Hart-S -Sco cott tt-R -Rod odin ino o fil filin ings gs if if thr thres esho hold ldss are are met met

5.

Be pre prepa pare red d to to resp respon ond d to requ reques ests ts for for addi additi tion onal al inf infor orma mati tion on re: re: Hart Hart-S -Sco cott tt-R -Rod odin ino o filings

6.

Revi Review ew Har Hart-S t-Scot cott-Rod -Rodiino fili ilings ngs fr from buye buyerrs

7.

Addr Addres esss Exon Exon-F -Flo lori rio o issu issues es if any any fore foreig ign n bid bidde ders rs

8.

Addr Addres esss Depa Depart rtme ment nt of Comm Commer erce ce fili filing ngss if if any any fore foreig ign n bidd bidder ers. s.









Asset Schedules

1.

Deta Detail iled ed list listin ing g of of asse assets ts vs. vs. des descr crip ipti tive ve appr approa oach ch??

2.

Dete Deterrmine mine which hich ass assets ets are are subj subjec ectt to li liens ens

3.

Dete Deterrmine mine which hich ass assets ets ar are lea leassed or lice licens nsed ed

4.

Coor Coordi dina nate te obta obtain inin ing g cons consen ents ts to assi assign gnme ment nt of leas leased ed and and lic licen ense sed d asse assets ts

5.

Dete Determ rmin inee sell seller er pos posit itio ion n re: re: cos costs ts of obta obtain inin ing g cons consen ents ts

6.

Dete Determ rmin inee sel selle lerr pos posit itio ion n if if con conse sent ntss not not obta obtain ined ed..









Confidentiality Agreements

1.

Prepa repare re form orm of Conf Confiident dentia iali litty Agr Agree eeme ment nt

2.

Dete Determ rmin inee whi which ch poin points ts sell seller er or buye buyerr wil willl be be fle flexi xibl blee on: on: (a) (a) Term Term of conf confiident dentiialit ality y obl obliigati gation onss (b) Term of standstill (c ) Non Non-solicitation of em employees (d) Venue for disputes (e ) Changes to st standstill (f) Oral disclosures

3.

Ensu Ensure re that that Conf Confid iden enti tial alit ity y Agree Agreeme ment nt full fully y execu execute ted d prior prior to to provi providi ding ng info inform rmat atio ion n

4.

Prep Prepar aree log log of info inform rmat atio ion n and and doc docum umen ents ts prov provid ided ed to buye buyer r Coordination with Customers & Vendors

1.

Dete Deterrmine mine what hat not notices ices to give give to cus custom tomers ers

2.

Determine wh what notices to to gi give to to ve vendors

3.

Dete Deterrmine mine whet hether her any any new new agr agree eem ment ents nee neede ded d Data Room

If a data room is to be established containing information of the seller, consider the following issues: 1.

Determine lo location of Data Room

2.

Esta Establ blis ish h proc procedu edure ress for for bidd bidder erss rev revie iewi wing ng inf infor orma mati tion on in in the the Dat Dataa Room Room

3.

Esta Establ blis ish h proc proced edur ures es re: re: copy copyin ing g of info inform rmat atio ion n

4.

Dete Deterrmine mine whi which ch docu docum ments ents to incl nclude ude in in Dat Dataa Roo Room m

5.

Anal Analyz yzee if any any docu docume ment ntss need need to to be exc exclu lude ded d becau because se of of anti antitr trus ust, t, conf confid iden enti tial alit ity y or attorney-client privilege issues









Due Diligence

In connection with a potential acquisition transaction, the following materials or information relating to the target company and any subsidiaries (together, the "Company") are typically requested. (A)

Corporate Documents of the Company and Subsidiaries

(1) (1) (2) (2) (3) (4) (5) (6)

(B)

Previous Issuances of Securities

(1) (1) (2) (2) (3) (4) (5) (5) (6) (7) (7) (8) (8) (9) (9) (10) (10) (11)

(C)

Arti Articl cles es of Inco Incorp rpor orat atio ion n and and all all ame amendm ndment entss the there reto to.. Byl Bylaws aws and and all all ame amend ndme ment ntss the there retto. Minute Minutess of all Board Board of of Dire Directo ctors, rs, commit committee tee and shareh sharehold olders ers meeti meetings ngs and all all consents to actions without meeting. List List of states states and juri jurisdi sdicti ctions ons in which which qual qualifi ified ed to to do busines businesss and and in which which the the Company has offices, holds property or conducts business. Materi Material al info informa rmati tion on or or docu documen ments ts furnis furnished hed to shareh sharehold olders ers and to dire directo ctors rs during the last two years. Most Most recent recently ly obta obtaine ined d good good standi standing ng certi certific ficate atess for for all all state statess and jurisd jurisdict iction ionss where the Company is qualified to do business.

All All appli applica cati tion onss and perm permit itss for iss issua uanc nce/ e/tr trans ansfe ferr of secu securi riti ties es.. Samp Sample le copy copy of stock stock cert certif ific icat ates es,, warr warran ants ts and and opti option ons. s. Stockho Stockholde lderr info informa rmatio tion, n, indi indicat cating ing number number of shar shares es held held,, dates dates of issu issuanc ance, e, and and consideration paid. All stock stock opti option, on, stock stock purc purchas hasee and and other other empl employe oyeee benef benefit it plans plans and forms forms of agreements. List List of any any out outst stand andin ing g sto stock ck optio options ns and and war warra rant nts. s. Any voting voting trust trust agreem agreement ents, s, buy/se buy/sell ll agreem agreement ents, s, stoc stockhol kholder der agreem agreements ents,, warrant agreements, proxies, or right of first refusal agreements. Any regi regist stra rati tion on rig right htss or prepre-em empt ptiv ivee righ rights ts agre agreem emen ents ts.. Powe Powers rs of att attorne orney y on any any mat matter. er. Conv Conver erttible ble debt debt inst instrrumen uments ts.. Other Other contra contracts cts,, arrange arrangemen ments, ts, or publ public ic or priva private te docume documents nts or comm commitm itment entss relating to the stock of the Company. Any debt arrangement arrangements, s, guarant guarantees ees or indemnific indemnification ation between between officer officers, s, directors directors or the shareholder and the Company.

Material Contracts and Agreements

(1)

List List of banks banks or other other lende lenders rs wit with h whom whom Comp Company any has a financ financial ial relati relations onship hip (briefly describe nature of relationship - lines of credit, equipment lessor, etc.).











(3) (4) (4) (5) (D)

Litigation

(1) (1) (2) (2) (3) (4) (4) (5) (E)

All materi material al corre correspo sponden ndence ce with with lende lenders rs duri during ng the the last last thre threee years years,, inclu includin ding g all compliance reports submitted by the Company or its accoun tants. List List of majo majorr cli clien ents ts and and the their ir loca locati tion ons. s. Any Any ot other ma material co contr ntracts cts.

Copie Copiess of any any plea pleadi dings ngs or or corr corres espo ponde ndenc ncee for pendi pending ng or pri prior or laws lawsui uits ts involving the Company or the Founders. Summ Summar ary y of dis dispu pute tess with with sup suppl plie iers rs,, compe competi tito tors rs,, or cus custo tome mers rs.. Corres Correspond pondence ence with with audi auditor tor or account accountant ant regard regarding ing threat threatene ened d or pending pending litigation, assessment or claims. Decre Decrees es,, orde orders rs or or judgm judgment entss of cou court rtss or gove govern rnme ment ntal al age agenci ncies es.. Settlement documentati ation.

Employees and Related Parties

(1) (1) (2) (3) (4) (5)

(6)

(7) (8)

A manag managem ement ent org organ aniz izat atio ion n chart chart and and bio biogr grap aphi hica call info inform rmat atio ion. n. Summary of of any any labor bor di disput putes. Corres Correspond pondence ence,, memo memoran randa da or notes notes concer concernin ning g pendi pending ng or threat threatene ened d labor labor stoppage. List List of negoti negotiati ations ons with with any any group group seekin seeking g to become become the the barg bargain aining ing unit unit for for any any employees. All employ employmen mentt and and consul consulti ting ng agreem agreement ents, s, loan loan agre agreeme ements nts and docume documents nts relating to other transactions with officers, directors, key employees and related parties. Schedul Schedulee of all compen compensat sation ion paid paid to office officers, rs, direct directors ors and key employ employees ees for most recent fiscal year showing separately salary, bonuses and non-cash compensation (i.e. use of cars, property, etc.). Summar Summary y of employ employee ee benef benefits its and copies copies of any any pens pension ion,, profi profitt shari sharing, ng, deferr deferred ed compensation and retirement plans. Summar Summary y of of mana managem gement ent incent incentive ive or bonus bonus plans plans not not includ included ed in in (7) (7) above, above, as well as other non-cash forms of compensation.









(5) (6) (7) (7) (8) (9) (10) (10) (11) (11) (12) (12) (13) (13) (G)

Property

(1) (1) (2) (3) (4) (4)

(H)

A descr descript iption ion of all changes changes in acco account unting ing method methodss or princi principle pless duri during ng the the last last three fiscal years. Any documen documents ts relati relating ng to to mater material ial writewrite-down downss or write write-of -offs fs other other than than in the the ordinary course. Reven Revenue ue,, gross gross mar margi gin n and ave avera rage ge sel selli ling ng pric pricee by produ product ct or or serv servic ice. e. Managem Management ent letter letterss or specia speciall repor reports ts by auditor auditorss and and any any resp respons onses es ther thereto eto for the last three fiscal years. Letter Letterss of counse counsell to the Company Company delive delivered red to to audit auditors ors for the last last thre threee fisca fiscall years. Aging Aging sched schedule uless for account accountss recei receivabl vablee for for the the last last two two years years.. Brea Breakd kdown own of of G&A G&A expe expens nses es for for the the las lastt two two year years. s. Copie Copiess of any any valu valuat atio ions ns of the the Compa Company ny's 's sto stock ck.. Descr Descrip ipti tion on of all all con conti ting ngen entt liab liabil ilit itie ies. s.

List List of of real real and and mat mater eria iall pers person onal al pro prope pert rty y owne owned d by the the Com Compa pany ny.. Documen Documents ts of of tit title, le, mortga mortgages ges,, deeds deeds of trus trustt and and secur securit ity y agree agreemen ments ts pert pertain aining ing to the properties listed in (1) above. All outsta outstandi nding ng leas leases es with with an orig origina inall term term greate greaterr than than one one year year for real real and and personal property to which the Company is either a lessor or lessee. Docum Documen ents ts pert pertai aini ning ng to prop propri riet etar ary y techn technol olog ogy y devel develop oped/ ed/ow owned ned by the the Company, including any copyright or patent filings. This will also include information confirming that the Company's systems, software and technology is owned solely by the Company and does not infringe on any other party's rights.

Taxation

(1) (2) (2) (3)

Any notice notice of asse assessm ssment ent,, reven revenue ue agent agents' s' repo reports rts,, etc. etc. from from federa federall or state state authorities with respect to any currently "open" years. Fede Federa rall and and stat statee incom incomee tax tax retu return rnss for for the the las lastt thr three ee yea years rs.. Eviden Evidence ce of Company Company being being curr current ent on sale saless tax, tax, unem unemplo ployme yment, nt, social social securi security, ty, and other tax payments.









(3) (3) (K)

Governmental Regulations And Filings

(1) (1) (2) (3) (4) (5) (L)

Any Any agre agreem emen ents ts reg regar ardi ding ng div dives esti titu ture re or or asse assets ts..

Summ Summar ary y of of OSH OSHA A inq inqui uiri ries es for for pas pastt thr three ee yea years rs.. Summar Summary y of federa federall and and state state EPA, EPA, EEO, EEO, or or other other governm government ental al agen agency cy inqui inquirie riess during the past three years. Materi Material al repor reports ts to gove governm rnment ent agenci agencies es for for past past three three year yearss (e.g (e.g., ., OSH OSHA, A, EPA) EPA).. Copies Copies of of all all permi permits ts and and lice license nsess neces necessar sary y to to conduc conductt the the Comp Company any's 's busi busines ness. s. Summar Summary y of of appl applica icable ble federa federal, l, state state and local local laws, laws, rules rules and regula regulatio tions. ns.

Miscellaneous

(1) (1) (2) (3) (3) (4) (4) (5)

Pres Presss rel relea ease sess duri during ng the the las lastt two two year years. s. Articl Articles es and and othe otherr pert pertine inent nt mark marketi eting ng studi studies es or or repor reports ts relati relating ng to to the the Compa Company ny or the industry. Info Inforrmat mation reg regar ardi ding ng com compe pettitor itors. s. Cust Custom omer er sati satisf sfac acti tion on surv survey eys, s, if any. any. Curren Currentt broc brochur hures es and sales sales materi materials als descri describin bing g the the Company Company's 's servic services. es.









Employee and Union Issues

1.

Employee Hiring (a) (a) Cons Consid ider er whe wheth ther er buy buyer er shou should ld be req requi uire red d to hir hire: e: (i) (i) All All emp emplloyee oyeess wor worki king ng at the bus busines iness; s; (ii) (ii) All employ employees ees other other than than thos thosee who who are are out on long long term term disa disabil bility ity or other leave; (iii (iii)) All All emp emplo loye yees es for for at leas leastt 60 days days;; or or (iv) (iv) No empl employ oyee eess othe otherr tha than n tho those se it wish wishes es to hire hire.. (b) With With respe respect ct to union union empl employe oyees, es, conside considerr whet whether her buyer buyer should should be requir required ed to to adopt/assume any existing existing collective bargaining agreements agreements with the seller. If adoption or assumption by buyer is desired, is union consent required? Also what plans will buyer have to adopt or agree to participate in as a result of hiring such union employees and adopting or assuming the relevant collective bargaining agreements?

2.

Retention/Severance Pl Plans (a) (a) Consi Conside derr wheth whether er seve severa ranc ncee plan plan shoul should d be adopt adopted ed,, revis revised ed or cla clari rifi fied ed.. (b) (b) Consi Conside derr whet whether her ret reten enti tion on plan plan sho shoul uld d be adop adopte ted, d, and and for for what what gro group up of employees. (c) Conside Considerr whet whether her the acquis acquisiti ition on should should be an event event causin causing g full full vesti vesting ng of affected employees (i.e., partial termination) under pension plan or 401(k) plan.

3.

Cons Consid ider er appl applic icabi abili lity ty of of WAR WARN N Act; Act; prep prepar aree WARN WARN Act Act not notic ices es if if nece necess ssar ary. y.

4.

Revi Review ew col collect lectiive bar bargain gainiing agr agreeme eement ntss.

5.

Review any employment ent agreem eements.

6.

Dete Determ rmin inee whet whethe herr new new empl employ oyme ment nt agr agree eeme ment ntss are are appr approp opri riat atee









Employee Benefits

1.

Due Due Dil Diligen igence ce Mat Matter ters/Re s/Repr pres esen enttatio ations ns (a) Prepar Preparee mater material ial to provid providee buyer buyerss for for due due dili diligen gence ce purpo purposes ses,, such such as as list list of all all employee plans, employment agreements etc. (b) Assemb Assemble le and copy actual actual plan plan docum document ents, s, summar summary y plan plan descri descripti ptions ons,, IRS IRS Form Form 500’s and other materials. (c) Conside Considerr wheth whether er ther theree are are any any ERIS ERISA A liabi liabilit lities ies that that may may becom becomee an issue issue during during the transaction. If there are any, determine determine what position seller should take, including whether seller is willing to indemnify buyer for such liabilities. (d) Begin Begin to consid consider er what what repres represent entati ations ons seller seller is willi willing ng to to make make with with regard regard to ERISA matters. (e) Determ Determine ine whethe whetherr any any chan change ge in in contr control ol provis provision ionss in in any any empl employe oyeee plans plans,, stock stock options plans or agreements or employment agreements will be triggered by transaction and what financial effect would be.

2.

Single Employer Pension Plans (a) (a) Can Can or shou should ld spo spons nsor orsh ship ip of of any any such such pla plans ns be be tran transf sfer erre red d to buy buyer er?? (b) (b) Shou Should ld ass asset etss and and liab liabil ilit itie iess of any any suc such h plan plan be be trans transfe ferr rred ed?? (i) (i) Do such such plan planss hav havee sur surpl plus us,, or or are are they they unde underf rfun unde ded? d? (ii) (ii) If trans transfer fer of asse assets ts and and liab liabili iliti ties es is is sugges suggested ted,, need need to to deter determin minee on what basis the amount of transferred assets will be determined, and need to discuss this with plan’s actuary.

3.

Multiemployer Pe Pension Pl Plans (a) (a) Will Will tra trans nsac acti tion on tri trigg gger er wit withd hdra rawa wall liab liabil ilit ity? y? (b) If withdr withdrawa awall liab liabili ility ty would would other otherwis wisee be trigger triggered ed by by tran transac sactio tion, n, shou should ld purchase agreement require buyer to post p ost bond to prevent withdrawal liability?

4.

401(k)/Savings Plans (a) (a) Can Can or shou should ld spo spons nsor orsh ship ip of of any any such such pla plans ns be be tran transf sfer erre red d to buy buyer er?? (b) (b) Shou Should ld acc accoun ountt bala balanc nces es be be tran transf sfer erre red d to plan plan ado adopt pted ed by by buye buyer? r? (c) Should Should assets assets be distri distribut buted ed to to emplo employee yeess who who will will have have opti option on to to roll roll account accountss











(ii) (ii) (iii) (iii)

Substa Substanti ntiall ally y simil similar ar bene benefit fitss to those those it it provi provides des for its own employ employees ees who are similarly situated; or Any benefit benefitss that that the the buye buyerr choos chooses es to to provid providee (howev (however, er, addres addresss union union issues.).









Environmental

1.

Iden Identi tify fy Exis Existi ting ng Envi Enviro ronm nmen enta tall Info Inform rmat atio ion/ n/Da Data ta (a) (a) Envi Envirronm onmenta entall sit site asse assesssmen smentts (i) Phase I repor ports (or equ equival valents nts) (ii) (ii) Phase Phase II-I II-III II type type repor reports ts (i.e., (i.e., subsur subsurfac facee inves investig tigati ation, on, reme remedia diatio tion) n) (b) (b) Regul Regulat ator ory y com compl plia iance nce audi auditt (in (inte tern rnal al or or by by cons consul ulta tant nts) s) (c ) Agency co correspondence (i) Inspection reports (ii) (ii) Noti Notice cess of viol violat atio ion n and/ and/or or enfo enforc rcem emen entt act actio ions ns (d) Permitting (i) Current permits (ii) Pending applications (e ) Environmental lit litigation (i) Governmental ac actions (ii) (ii) Thir Thirdd-pa part rty y (to (toxi xicc tor torts ts,, Pro Prop p 65, 65, etc. etc.))

2.

Ascert Ascertain ain Enviro Environme nmental ntal Statu Statuss of of Assets Assets (incl. (incl. hazard hazardous ous materi materials als,, asbe asbesto stos, s, wetlan wetlands, ds, endangered species, permitting and compliance) (a) (a) Esti Estima mati tion on of futu future re cost costss (if (if poss possib ible le))

3.

Dete Determ rmin inee How How to to Fil Filll in in Inf Infor orma mati tion on Gap Gapss and and/o /orr Bid Bidde ders rs’’ Req Requi uire reme ment ntss (a) (a) Cond Conduc uctt addi additi tion onal al due due dil diligenc gencee









Existing Contracts Review

1.

Identify and and summ ummarize al all co contracts

2.

Dete Determ rmin inee whet whethe herr amen amendm dmen ents ts to cont contra ract ctss are are appr approp opri riat atee

3.

Dete Determ rmin inee wha whatt new new or tran transi siti tion on cont contra ract ctss are are nece necess ssar ary y

4.

Coor Coordi dina natte obt obtai aini ning ng any any nec neces esssary ary con conssent ents Insurance Considerations

1.

Dete Determ rmin inee any any need needed ed cha chang nges es to to insu insura ranc ncee poli polici cies es pre pre-c -clo losi sing ng

2.

Dete Determ rmin inee any any nee neede ded d chan change gess or or can cance cell llat atio ion n effe effect ctiv ivee as as of of the the clos closin ing g

3.

Modi Modiffy or eli elimina minatte bon bonds ds (as appr approp opri riat ate) e) Intellectual Property

1.

Eval Evalua uate te stre streng ngth th of sell seller er’s ’s inte intell llec ectu tual al prop proper erty ty..

2.

Eval Evalua uate te whe wheth ther er sel selle ler’ r’ss prod product uctss or serv servic ices es inf infri ring ngee on any any thi third rd par party ty rig right htss

3.

Review patents, if any.

4.

Dete Determ rmin inee if empl employ oyee eess and cons consul ulta tant ntss have have execu execute ted d appro appropr pria iate te Conf Confid iden enti tial alit ity y and Invention Assignment Agreements.









Political/PR

1.

Dete Deterrmine mine what hat lobby obbyiing may may be appr approp opri riat atee

2.

Draft and review press releases

3.

Establ Establish ish well well under understo stood od intern internal al poli policy cy for commen commentar tary y to to the the pres presss on on this this transa transacti ction on Real Estate

If the business includes any real estate owned by the seller, consider the following: 1.

Prep Prepar aree disc disclo losu sure re of cond condit itio ion n of prop proper erty ty and and any any prob proble lems ms

2.

List personal and real property

3.

List List any any liens ens, enc encum umbr bran ance cess and and eas easemen ements ts

4.

Address title issues (a) Select Select nation nationall ally y reco recogni gnized zed title title insura insurance nce company company (obtai (obtain n bids bids on title title insurance premium costs) (b) Provid Providee titl titlee company company with with copies copies of all all lega legall descri descripti ptions ons and and asses assessor sor’s ’s parc parcel el numbers (c) Confirm Confirm curren currentt vesti vesting ng of of titl titlee and determ determine ine if additio additional nal transf transfers ers are requir required ed (d) (d) Obtai Obtain n copi copies es of all all unde underl rlyi ying ng tit title le exc excep epti tion on docu docume ment ntss (e) (e) Obt Obtain/ ain/ date date eded eded









(a) (a) (b) (b) (c ) (d) (e) (e) (f) (f) (g)

Leas Leases es (asce ascerrtai tain ass assiignab gnabiility ity) Serv Servic icee cont contra ract ctss (asc (ascer erta tain in ass assig igna nabi bili lity ty)) Environmental re reports Buildi Building ng plans, plans, drawin drawings, gs, specif specifica icatio tions ns (for (for major major facil faciliti ities es only) only) Zoni Zoning ng and and subd subdiv ivis isio ion n map map act act comp compli lian ance ce Gover Governm nment ental al lice licens nses es,, permi permits ts and and devel developm opmen entt agreem agreement entss (asce (ascert rtai ain n assignability) Surveys Sale Process

1.

Dete Determ rmin inee pro proce cedu dure ress for for diss dissem emin inat atin ing g Con Confi fide dent ntia iali lity ty Agre Agreem ement entss

2.

Establish expected timetable

3.

Coor Coordi dina natte wi with inves nvestm tmen entt ban banke kers rs,, if any any

4.

Assist with negoti otiation strategy

5.

Prepare management scripts

6.

Prepare manage agement presentations ons

7.

Assist with Data Room setup

8.

Cons Consid ider er sep separ arat atee Data Data Roo Room m for for sel selle lerr comp compet etit itor orss who who cond conduct uct due due dili dilige gence nce

9.

Pr

e defin definit itiv iv

ts t

ent to to bidd bidder er ( e “A

nt P

ti

”)











Sales

Review sales and marketing matters of seller, including: 1.

Description of sales.

2.

Numb Number er of of orde orders rs,, cust custom omer ers, s, and and nam names es of of prin princi cipa pall cust custom omer ers. s.

3.

Sale Saless by prod produc uctt for for pas pastt fiv fivee year yearss and and for for past past twe twelv lvee mont months hs..

4.

Sale Saless bac backl klog, og, acco account untss rec recei eiva vabl blee act activ ivit ity, y, and and cus custo tome merr con conti tinu nuit ity. y.

5.

Sales ales cor corre resspond ponden ence ce,, ret retur urns ns,, and and allo allowa wanc nces es..

6.

Sale Saless poli polici cies es and and met metho hod d of com compe pens nsat atio ion n of sal sales es per perso sonn nnel el..

7.

Pric Pricin ing g pol polic icie iess and and fluc fluctu tuat atio ions ns in past past five five year years. s.

8.

Cred Crediit te

ial

t









Tax

1.

Address state tax issues (a) (a) Trea Treattment ment of disp dispos osiition tion incom ncomee (b) Sales tax consequences (c) (c) Prope Propert rty y tax tax reas reasse sess ssme ment nt to real real prop proper erty ty inte intere rest stss

2.

Address federal tax treatment

3.

Dete Determ rmin inee if if tax tax-f -fre reee or or tax taxab able le trea treatm tmen entt is is exp expec ecte ted d

4.

Addr Addres esss tre treat atme ment nt of reta retain ined ed cont contin inge gent nt liab liabil ilit itie iess

5.

Addr Addres esss net net oper operat atin ing g and and capi capita tall loss loss uti utili liza zati tion on tec techn hniq ique uess

6.

Addr Addres esss use of inst nstallm allmen entt sale sale struc tructu turre

7.

Addre dress Se Section 33 338(h)( h)(10) pl plannin ning









Checklist for Acquisition of a Private Company

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