Due-Diligence Assessment
Company Name
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Due Diligence Assessment Model: Scorecard
Date
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Month
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Day
Year
Rating summary
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Yes
No
Not Sure
Due diligence response
Financial performance
Brand value
Business condition
Prospects for the future
Customers
Competitive environment
Human capital
Quality of assets
Structure of purchase transaction
Other risks
Total Score
Financial performance
Due diligence item
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No
Not sure
Due diligence response
What is the current year profit (loss)?
What is the current year revenue?
What is the current year gross margin?
What is the 3-year revenue growth trend?
What is the revenue breakdown by product / services category, country and distribution channel?
What is gross margins by products /services?
Where is the most potential for growth? The greatest risk?
What is the profitability and margin comparison versus the industry?
Wht is the key assumptions for projected sales and operating cost by segment product?
Discuss the Company’s relationship with its current accountants as well as any significant findings in prior years audits ?
Does the company have pricing power? Why or why not?
Total Score
Brand value
Due diligence item
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Yes
No
Not sure
Due diligence response
Can the brand be leveraged to enter new markets or to resist economic downturns?
Are there there intellectual property rights (e.g. Trademarks etc.) for the domain names and product names?
Provide an overview of the Company’s marketing efforts?
Are a formal custodianship and an organization established to protect the brand?
Can the brand be marketed globally?
Total Score
Business condition
Due diligence item
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Yes
No
Not sure
Due diligence response
What is the current cost of entry into the industry? Is this cost rising or falling, and why?
Does the need for expensive fixed assets or other large capital expenditures limit our ability to compete?
Are inventory and equipment a large part of value?
If the business is service oriented, can it hold on to key talent? Why or why not?
What does the Company perceive to be the major opportunities and threats for its business? Is this consistent with competitors’ views?
Describe hat the Company considers to be its key strength and weaknesses? How does it address its weaknesses?
Is there a strong culture?
Total Score
Prospects for the future
Due diligence item
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Yes
No
Not sure
Due diligence response
What is the industry outlook?
Are the products or services differentiating enough?
Will the products or services soon be outmoded?
Has the company grown organically or by acquisitions historically? Can you continue with this growth strategy and can you do it better?
If applicable, is the research and development program adequately funded?
Is international competition emerging, or is it a current factor within the industry?
What is the company's reliance on the overall economic conditions?
Total Score
Customers
Due diligence item
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Yes
No
Not sure
Due diligence response
Describe the Company’s customer contracts? Average size, after sales and service contracts characteristics, etc.
Describe revenue per customer, how dependent is the company on few customers?
Has the company experienced a significant change in turnover among its important customers in recent years?
Is the company good at acquiring new customers?
Total Score
Competitive environment
Due diligence item
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Yes
No
Not Sure
Due diligence response
How many direct and indirect competitors are there?
What is the company's relative standing against its direct competition?
What is the company's strategy versus its competition?
Provide a detailed description of the Company’s key competitive advantages versus existing and emerging competitors?
Are there specific costs, processes, or technologies that limit competitive entry into the market?
Total score
Human capital
Due diligence item
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Yes
No
Not sure
Due diligence response
Do the company's products or services require special skills, education, or licensing?
Is the work desirable within the job community?
Are the environment and the culture considered suitable to the job community?
How does the compensation rank versus industry averages?
Are there a clear division of responsibilities between the senoir management and the Board of Directors?
Are there a clear organization structure chart in the company which all staff are aware of?
Do all staff have a role description including main responsibilities, tasks and goals?
Is there a human resources strategy that promotes employee development?
Are basic human resource compliance requirements met? If not, do the exceptions pose material legal risk?
Total score
Quality of assets
Due diligence item
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Yes
No
Not Sure
Due diligence response
Real estate: Are the location and the facilities suitable for the business?
Machinery and equipment: What are the costs for repairs? What are the costs for deferred purchases? What are the costs for new investments short term?
Total score
Structure of purchase transaction
Due diligence item
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Yes
No
Not sure
Due diligence response
Will the purchase of the company be highly leveraged?
What liabilities need to be assumed?
Is the company safely capitalized in its current condition?
How do cash flow ratios stack up against the industry and competitors?
Total score
Other risks
Due diligence item
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Yes
No
Not sure
Due diligence response
Is the labor unionized?
Would critical staff remain if the company is sold?
Are there any risks involved in assets or companies recently acquired by the company?
What are the financial liabilities and guarantees (including terms of any lease, mortgages, third party debt and intercompany loans)?
What is the general health of key personnel?
Are there any recent casualty losses and to which extent are they covered by insurance?
Are heavy government regulations prevalent in the industry, or is there potential for such regulation?
Are there any current or pending material litigation, including employees, customers, suppliers, government –related etc.?
Are operations unusually susceptible to weather, political events, or other generally uncontrollable events?
Total score
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