THE M&A CHECKLIST FOR STARTUPS

CORPORATE MATTERS FINANCE

GENERAL GENERAL

Organizational chart and Internal and external audits and work

management structure papers (last 5 years and YTD)
Charter documents, operating Audit inquiry responses and opinion
agreements, by-laws, business letters from legal counsel for the past
licenses, certificates of authority and 3 years
stock certificate Consolidated financials (last 5 years
Board actions and minutes and YTD)
Information and documentation on Consolidated quarterly financials
joint ventures, acquisition and/or (last 5 years and YTD)
disposals of subsidiaries, affiliates or Accounting reconciliation of all
major assets of the Company (last 5 accounts for the most recent
years) balance sheet available
Key contacts by function Trial balances (last 5 years and YTD)
Management biographies Description of any off-balance sheet
commitments
Description of any contingent
FACILITIES liabilities
Price and volume data by division
1 Details on any facility openings or and product annually
closing? (last 5 years) Annual P&L by location (last 5 years
Details on any facility turnarounds and YTD)
(last 5 years) Locations of accounting records and
personnel
Accounting policies and procedures
 FINANCE
GENERAL

Details on raw materials and Details on new product initiatives

currency risk management (e.g., strategy, cost, and P&L impact
hedging) (historical and projected)
Historical & projected cost & volume Detailed capex schedule including
of key material inputs breakout between maintenance,
Details on cash balances including growth and new products and
cash in different jurisdictions and acquisition (5 years historical and
accounts projected)
FX details (sales & costs by Annual profitability by customer (last
currency) 5 years and YTD)
List of Transformation Plan initiatives Annual breakdown of sales, volume,
and savings completed and and gross margin by product, by
remaining region and by customer
Details on any restructuring efforts Details on end-market exposure
including costs, timing, rationale and (historical and projected)
P&L impact (historical and Adjusted EBITDA and sales bridges
projected) (last 3 years)
5-year projection model including Detailed working capital schedule
assumptions and granular backup Product returns, charge-backs,
Acquisition pipeline for the Company discounts
including strategic rationale, Breakdown of cost of goods sold
expected purchase price, SG&A details
anticipated P&L, synergies, status, Business plan or most recent
timing forecast, including projections for 5
Breakdown of operating expenses for years
past 3 years Revenue and gross margins by
product for past 3 years
 ACCOUNTS RECEIVABLE INVENTORIES

1 Historical accounts receivable Summary of the composition of

schedule inventory for last 5 years
Top 20 past dues List of products as at the most
Details on any recognized bad debt recent balance sheet date
expense, write offs, and recoveries Detailed inventory valuation report at
Most up-to-date A/R aging December 31
List of inventory including the result
of the last stock physical count,
BANKS AND FINANCING reconciled with the accounting
balance at the date of physical count

List of all banks with which the Details of any inventories maintained

Company maintains financial and offsite

commercial relations Breakdown of inventory by

Detailed debt schedule classification (finished goods, WIP,

Promissory notes raw materials)

Loan agreements Inventory aging

Equipment/other lease agreements

Bank reconciliations (past 3 years)
FIXED ASSETS

MANAGEMENT REPORTS Summary schedule showing the

composition of the Company's fixed
For the last 5 years, year-to-date assets (most recent data)
management reports comparing the Schedule showing owned and leased
Company's actual result (in assets
accordance with the management Detailed fixed asset and depreciation
books) with the year's budgeted schedule as at December 31, 2013
result and YTD
Budgets and operating plans for Summary of depreciation policies
future periods (particularly detailed and the economic useful lives of
plans for year end 2014) fixed assets, by category
 SALES AND MARKETING MAJOR CUSTOMERS

Information on the company's sales Status and relationships

strategy and compensation structure Revenue breakdown - 5-year
associated with each channel historicals
Information on the business Pipeline analysis
development process (i.e., how Quality and stability of relationships
opportunities are identified, how are
bids determined, etc.)
List of major wins and losses over the SALES FORCE OVERVIEW
past 12 months
Description of major marketing Compensation - 5-year historical
channels and expenditures Quota average
List of customer complaints and Sales cycle
resolutions Hiring schedule
Incentive compensation plan(s) for Sales backlog by product
sales team
Lead sourcing and customer
management processes
OPERATIONS
Key quality measures tracked for the
past 3 years
SALES STRATEGY Key productivity measures tracked
for the last 3 years (i.e., revenue and

Description of global distribution output per employee, manufacturing

channels utilization, etc.)

Marketing opportunities/risks Workflow of operations

Order process flow (how orders are
received, what details are included,
how orders are shipped)
Product returns by customer for the
past 5 year
 LABOR RELATIONS
GENERAL

Employment agreements, List of self-employed people

applications for employment, hire providing services to the Company,
letters, and descriptions of containing name, initial date of
oral/informal promises or provision of services, remuneration
commitments regarding terms of and description of the services
employment provided (last 5 years and YTD)
Employee handbooks, policies, and List of outsourced companies
code of conduct providing services to the Company,
Payrolls, together with general containing name, initial date of
summary (last 5 years and YTD) provision of services, amount,
Employees by location, department, description of the services provided,
salaried vs. hourly, union vs. non- and contract terms (last 5 years and
union, and current compensation and YTD)
employment status
Employee headcount by location and CONTRACTS
function (last 5 years and YTD)
Material supply and sourcing
Summary of any collective bargaining
contracts
agreement/union agreement (last 5
Material customer contracts
years and YTD)
List of any guarantees,
Summary of any strike/work
indemnifications, or similar
stoppages/grievances
agreements
Consulting, freelance, and
Any other material contracts
independent contractor agreements
Loan agreements, credit lines, IRBs,
List of all executives that provide
derivatives, letters of credit, security
services to the Company, informing
agreements, guarantees, equipment
the corresponding remuneration
leases and other financing
(most recent)
documents
Detail surrounding temporary
All contracts or agreements
workers that provide services to the
providing for third party consent to
Company
this proposed transaction
 LABOR RELATIONS
All plans maintained or contributed
GENERAL to
Trust, annuity, guaranteed
List of all employees that work via investment, or other funding vehicles
fixed term contracts (most recent) and investment advisor contracts
Workers compensation claims IRS determination letters, with
Confidentiality, non-competes, or applications
similar agreements for current Form 5500 and supplementary
employees and for those currently in materials for past 3 years
effect Summary plan descriptions for all
plans
BENEFITS Most up-to-date Trustee report for
all plans
List of the benefits, both formal and Fiduciary liability policies and fidelity
informal, given to employees, bond
directors and officers (most recent) Current actuarial reports for defined
Equity-based compensation plans benefit plans
All compensation agreements All plans, booklets, policies and
covering senior management contracts for health, life, disability,
Severance benefit plans and other workers' compensation and other
change of control agreements insurance-type benefits
Pension/OPEB detail including most Current list of employee and
recent actuarial reports employer contributions or monthly
Profit sharing plan premium rates (with COBRA rates)
Summary biographies of senior for health and life insurance plans
management, including employment and gross premiums during last 24
history, age, service with the months
Company, years in current position Estimate of present value of post-
Bonuses paid out for the past 3 years retirement health and life insurance
Loans to employees, including from liability for current retirees and the
benefit plan emerging liability for future retirees
Qualified plans (pension, profit
sharing, stock bonus, ESOP)
 Claims, actions and proceedings
BENEFITS (other than normal benefit claims)
pending or threatened in connection
Claims experience reports and with any employee benefit or
related data (claims reserves, etc.) employment-related matter,
for last 24 months for health and life including wrongful discharge,
insurance plans broken down workers’ compensation and
between retirees and active unemployment benefit claims for last
employees 3 years
Date of hire, date of birth, and sex of List of plant closings and mass
each employee and former layoffs covered by WARN and
employee entitled to health or life notices regarding same
insurance benefits, and whether Analysis supporting financial
single, family or other coverage is statement amounts for pensions,
being provided postretirement medical and other
Non-qualified deferred benefit assets or liabilities
compensation arrangements and Analysis of the costs of such plan
incentive and bonus plans (cash as well as accrued
Unemployment insurance funded/unfunded liability) for the
arrangements, claims experience prior 3 fiscal years and for the
Attorneys’ responses to auditors’ interim period to date
requests in connection with plan
audits for last 3 years
Reports and filings with government,
ENVIRONMENTAL
including IRS, DOL, PBGC, SEC and MATTERS
state unemployment offices for last
Copies of environmental audits and
3 years
compliance reports
Phase 1 reports for all facilities
Environmental liabilities and
valuation
Prior ownership of facilities
Hazardous Wastes
Notices of violations received in the
past 3 years
 TAXES REGULATORY & LEGAL
All applicable tax returns filed for the MATTERS
last five years (federal, state, local,
property and foreign)
GENERAL
Details on any deferred tax assets
and liabilities
All permits and licenses
Details on any non-deductible
All compliance reports
expenses
Any deficiency notices
Reconciliation from marginal to
All pending lawsuits against the
effective tax rate
company - details, all court records,
Nature and location of assets of the
contingency planning
Corporation and their respective fair
All pending lawsuits initiated by the
market values and tax bases
company - details, all court records,
Federal or state tax audits and
contingency planning
supplementary materials
Historical and current regulatory
Property taxes paid for past 3 years
issues/information
Transfer pricing, strategy, analysis,
requests/settlements
and advice received
All reports submitted to regulatory
International income tax planning,
agencies
strategy, analysis, and advice
OSHA inspection reports
received
Documentation regarding any
governmental actions, investigations,
or proceedings regarding the
corporation for the past 3 years
 LITIGATION
INSURANCE GENERAL

Current schedule of insurance listing Summary of all material litigation for

each insurance in force, insurance the last 5 years
company, type of coverage, term of Any settlement agreements from the
policy, insured value or limits of last 5 years
liability and annual premium Documentation of any significant
Documentation regarding insurance litigation in process or anticipated
claims and coverage denials in the Pleadings and other material
last 3 years, including all documentation (including
correspondence in regard thereto evaluations of claims made internally
Insurance costs for the most recent or by counsel) in pending law suits
year by or against the Corporation
If self-insured, details of claims paid Copies of current consent decrees,
for the last 3 years and the most orders, administrative decrees or
recent interim period judgments against the Corporation
With respect to general liability and Listing of unsold inventory of
products liability, estimated sales of products involved in any current
the company and loss history trademark or patent litigation
With respect to workers
compensation, estimated annual
payroll by class (8810-Clerical CLAIMS
[including Executives]; 8742-Sales;
8010-Warehouse) Documentation regarding pending
List of all company vehicles and a list claims of any kind by or against the
of drivers containing: name, date of Corporation
birth, and driver’s license state and Product Liability claim
number Internal documentation regarding
Insurance carrier inspection reports product recalls or health/safety
advisories
 INTELLECTUAL
PROPERTY
TRADEMARKS AND COPYRIGHTS BRANDS

List of all trademarks and copyrights Owned Brands

Unregistered trademarks (owned or Copies of licensing/royalty
claimed) agreements and contractual terms
List of tradenames

BRANDS
PATENTS/INDUSTRIAL DESIGNS
Non-registered proprietary
List of all patents and other IP
processes, trade secrets, investions,
know-how or other proprietary
SOFTWARE / IT information owned or used
Licenses of proprietary rights (as
List and describe significant licensor or licensee)
software, hardware and IT systems Confidentiality agreements and
used to operate the Company and ownership of invention agreements
generate financial and management Pending or threatened infringement
reporting claims, opposition, or cancellation
proceedings

LAWSUIT AND LITIGATION

Any material IP litigation

NEW PRODUCT DEVELOPMENT AND

TECHNOLOGY

Details on historical and projected

R&D
Details on new product initiatives
 REAL AND PERSONAL
PROPERTY INDUSTRY
GENERAL GENERAL

List of all real estate, condition of Information on the company's end-

facilities, and needs to major markets
expenditures to maintain/upgrade Information on key industry drivers
Real estate valuation reports Market size/potential
(including building, inventory, Legislative or regulatory information
furnitures/fixtures) affecting the industry as a whole
Title reports and property surveys Internal/External reports, articles,
Vehicle fleet details as and/or white papers analyzing the
applicable market
Major fixed assets and equipment Key competitors by channel,
Properties held for sale including estimated revenue,
Lease/sublease agreements marketing share, major customers,
Notices/relevant correspondences, strategic priorities, etc.
including side letters or agreements,
alleged defaults, renewal of leases,
easements/encumbrances RESEARCH & DEVELOPMENT
Contracts for capital improvements

R&D Organizational Overview

Key personnel
Roadmap
New Product/Service pipeline
Development costs
MVP status
Product development process