Warm [INV./FUNDregards,MANAGER NAME]
Dear [COMPANY POC]: We enjoyed meeting with you on [INSERT DATE], and we are excited to continue the process of evaluating your company for a potential investment. First, to help manage expectations, the investors with whom we work are mainly from the U.S. and Europe, and may seem cautious, slow and demanding at times. So, to help your company increase the chances of attracting an investment partner, we need to gather a number of documents from you to be prepared to provide information about the opportunity and answer their questions. That being said, [INV./FUND MANAGER NAME] is here to help you prepare and make it an enjoyable and hopefully successful process. Our main request of you is to be responsive, accessible and communicate regularly with our team. Let us know if you need more time or help with something; silence or any delays may result in potential investors walking away. To help manage an efficient pre-investment experience, we have developed a “due diligence” worksheet. This worksheet outlines all the various documents we may request from you. Don’t worry; we know many of these will not exist for your company. This is a comprehensive list. However, if you already have some of these documents, we encourage you to start gathering them in one folder and begin scanning them into softcopy format. Also, rest assured that all of your documents will be secured with our team, and we will only share them with potential investors. This process will be helpful in securing financial investments from any financier, so as you collect these documents into one folder, be sure to make copies for future reference. Before we begin, we simply ask that you read down the left-hand column of this document (we can even do this with you). If you have the document, write “have” in the status column. If you don’t, write, “Don’t have.” And if you don’t believe it applies to you, write “N/A”. If you don’t understand what a document is or what a request is asking for, write “?”. Once you have read and completed this form, simply sign it, and either scan and send it to [SENDER’S EMAIL ADDRESS] or call us and we can come pick it up. Then, we will begin helping you prepare! Please call us if you have any questions.
into [COMPANY NAME]
DUE DILIGENCE TOOL |. 1 DUE DILIGENCE REQUEST RE:[CITY,[ADDRESS][COMPANY][TITLE][NAME]COUNTRY]Potentialinvestment
DUE DILIGENCE TOOL |. 2 INVESTMENT INFORMATION REQUESTS 1. CORPORATE DOCUMENTS DOCUMENT COMMENTS STATUS (HAVE, DON’T HAVE, N/A) Memorandum of Association / Articles of Association / Bylaws MoA, AoA, Amendments, Bylaws, Certificates of Designation, certificates of name change, other corporate documents, etc. Business Licenses / Investment License A copy of all government provided info. Tax Registration / TIN Number / VAT Certificate A copy of all government provided info. Board Minutes / Resolutions Minutes of directors’ and stockholders’ meetings, and all written consents or resolutions of directors and stockholders. Import / Export Licenses A copy of all government provided import or export licenses. Other, including foreign entities corporate documents
necessary and /
Copies of all other or
foreign entity corporate documents.
NO) Business Plan or Feasibility Study
DOCUMENT COMMENTS STATUS
Quarterly Financial
Financial
2. BUSINESS PLAN, FINANCIAL STATEMENTS AND FINANCIAL INFORMATION (HAVE, DON’T HAVE, N/A, YES, Any written business, strategic, marketing or investment plan. Projections Excel File For the next five years, including detailed investment requests, budgets and assumptions. Budget Budget for the current fiscal year. For last year and for the period
DUE DILIGENCE TOOL |. 3
Internal Audit Reports Internal audit reports (if any) for the past three years Bank Accounts / Bank Statements
Provide a List: Secondary Auditor Are you willing to undergo another audit from a firm hired by [INV./FUND MANAGER NAME]?
&
Revenue RecognitionRevenue
Details of the Company’s revenue recognition policy and a month-onmonth revenue breakdown by product type (quantity, price, etc.)
DOCUMENT COMMENTS DON’T HAVE, YES, NO)
Statements since the latest fiscal year-end.
N/A,
STATUS (HAVE,
All letters that have been sent to the Company in connection with all audits for the past three years, including any management letters from external auditors
A list of all the Company’s bank accounts (including authorized signatories on each account and any restrictions on withdrawals) and copies of the Company’s bank statements for the past three years (or since start of operations, if less than 3 years)
Cash on Hand Latest cash on hand count certificate Auditor Information (name and contact information for auditors)
Audited Financial Statements For the past three fiscal years (if available), including balance sheet, income statement, and statement of cash flows (whether audited or unaudited). Please include auditor contacts, notes, footnotes, etc. Audit Cases
Cost of Sales Month-on-month cost of sales breakdown by product type for the past three years
Inventory Inventory aging report as of the last balance sheet date with a reconciliation to the general ledger; copies of periodic inventory counts and comparison to stock records; annual and month-on-month breakdown of inventory by category, inventory written-off and obsolete stock; copy of the inventory policy, if any (describing the stock take procedures, basis for valuing inventory, internal inventory controls, etc.)
Trade Receivables Accounts receivable aging report as of the last balance sheet date with a reconciliation to the general ledger; annual breakdown of bad debts/write-offs; details of any disputed receivables balances; details of any overdue debts and efforts to recover them; year-end breakdown of other assets (e.g., prepayments, deposits, loan advances, etc.)
Fixed Assets List of fixed assets as at the end of each financial year for the past three years and as of the latest available balance sheet; reports from the internal auditor reconciling the fixed assets to the audited financials for each year
DUE DILIGENCE TOOL |. 4 DOCUMENT COMMENTS STATUS (HAVE, DON’T HAVE, N/A, YES, NO) for the past three years
Selling, General & Administrative Expenses Month-on-month SG&A breakdown for the past three years
Ownership Agreements
Copies of agreements relating to outstanding options, warrants, rights (including conversion or preemptive rights), agreements for the purchase or acquisition of any of the Company’s securities, and agreements relating to the
Owners
DUE DILIGENCE TOOL |. 5 DOCUMENT COMMENTS STATUS (HAVE, DON’T HAVE, N/A, YES, NO) Trade Payables Accounts payable aging report as of the last balance sheet date with a reconciliation to the general ledger; details of any disputed payable balances; year-end breakdown of other payables (e.g., tax payables, accruals, deferred revenue, loans, etc.) Borrowings Summary of all borrowings and outstanding amounts due; repayment schedules for all borrowings and monthly bank reconciliations for the same; loan and interest expense ledgers for all borrowings Finance Manuals / Policies Copies of finance manuals or other internal policies covering internal financial controls / financial processes 3. CORPORATE STRUCTURE AND OWNERSHIP DOCUMENT COMMENTS STATUS (HAVE, DON’T HAVE, N/A)
List of Board of A list of the Company’s Board of Directors members.
Director Members
List of A list of the stockholdersCompany’sandanyperson who has the right to buy shares in the Company.
Customer Agreements
Organizational Chart and Resumes for Management and Key Employees Please provide a current org. chart showing all management positions, along with current resumes/bios for all managers or other key employees 4. MATERIAL AGREEMENTS AND OPERATING INFORMATION DOCUMENT COMMENTS STATUS (HAVE, DON’T HAVE, N/A) Outstanding Payment Obligations
Copies of all agreements with customers (sale contracts, POs, invoices, etc.) for the past two years and a list of the Company’s top 10 customers. Agreements Contracts with suppliers, distributors, or manufacturers upon which the company’s business is or is expected to be dependent, and a list of the Company’s top 10 suppliers.
past stock issuances. Ownership Structure Please provide details about the structure
Vendor
DUE DILIGENCE TOOL |. 6 DOCUMENT COMMENTS STATUS (HAVE, DON’T HAVE, N/A)
Any agreements, contracts, or proposed payment transactions that the Company is bound to make greater than $5,000.
Title to Property Title deeds for any property owned by the Company. property lease or rental agreements. encumbrances over the property owned, leased or occupied
Encumbrances Any
Company’s (trade company, company).
Lease Agreements Any
public limited
name, share
Loan or Debt Agreements
A list or register of all assets owned, leased or used by the Company and any documents evidencing ownership, lease or right to use such assets.
Employees, Wages & Salary Scales
Headcount of employees by department and a summary of
Employee Contracts and Benefits
Copies of agreements for money borrowed, guaranties, equipment leases, or any similar liabilities incurred by the Company and any material correspondence (including default notices or other demands) in connection with the loan/debt agreements.
Any agreements, understandings, or proposed transactions between the Company and any of its officers, directors, or employees, including employment agreements. Including, without limitation, stock option plans, pension plans, and insurance plans. Include example employee agreement / standard terms and conditions of employment and note whether any employees are part of a trade union.
Mortgage Agreements / Security Agreements / Liens
DOCUMENT COMMENTS STATUS (HAVE, DON’T HAVE, N/A) by the Company, including any rights of way, easements, licenses, air/light restrictions, etc. Assets
DUE DILIGENCE TOOL |. 7
Copies of agreements for mortgages, security agreements, liens (including tax liens or other statutory liens), or other charges or pledges over the Company’s property or assets, and a list of all assets currently pledged as collateral.
Partnership Agreements Partnership agreements,
monthly payroll (i.e., salaries, bonuses, pension, commissions, any/all information helpful in completing the SEAF GES pay equity analysis, etc.) for the last year
A copy of the Company’s training program(s) that is(are) used to train the staff on what is expected of them per HR policies and/or the Employee Handbook. If the training presentations are separated, send them as a zipped folder.
HR Manual or Employee Handbook
DOCUMENT COMMENTS
STATUS (HAVE, DON’T HAVE, N/A)
Documents describing any legal actions, past or present, begin taken against the Company, stockholders, directors or key personnel.
Acquisition or Sale Agreements Documents relating to any acquisitions and/or sale of the Company or major Company assets.
HR Training Program
Legal Cases / Lawsuits
A copy of the Company’s HR manual and/or Employee Handbook that houses the HR policies and processes enforced by the Company. If policies are separated, send them as a zipped folder.
Insurance Agreements
DUE DILIGENCE TOOL |. 8
A summary of all insurance policies, or certificates of insurance, with respect to insurance held by the Company or of which the Company is a beneficiary. Include expiration dates and renewal information for all policies and indicate whether premiums have been timely paid.
STATUS (HAVE, DON’T HAVE, N/A) shareholders agreements or noncompetition agreements. Also include joint venture, associations, research and development, and technical cooperation agreements.
Related Party Transactions
DOCUMENT COMMENTS STATUS (HAVE, DON’T HAVE, N/A)
NOTE: Many of the following items may not apply to the Company, so please read carefully.
DOCUMENT COMMENTS
5. INFORMATION REGARDING PRODUCTS AND SERVICES
Default Notices Any notices of actual or alleged breach or default under any contract or agreement to which the Company is party. Material Negotiations Details of any negotiations of material importance to the Company that are currently in progress.
Insolvency / Winding Up Any court orders, petitions, resolutions or other documents filed for the insolvency or winding up of the Company, or details about any events or circumstances that could give rise to insolvency of the Company.
DUE DILIGENCE TOOL |. 9
List of Products and Services Include products that are existing and those that are being developed in each line of business, with short
Details of any related party transactions (e.g., transactions between the Company and its shareholders, directors, affiliates, etc.), including amounts involved, nature of the transaction, relationship with the related party and the year-end balance
Trademarks
DOCUMENT COMMENTS
Issued patents and patent applications, and information regarding any foreign patent filings.
Trademark Agreements
All documents relating to all agreements dealing with trademarks, e.g., consent letters, mutual agreements, licenses, or opposition settlement agreements, whether the Company is licensee or licensor.
Any brochures, advertisements, and industry reports in which the Company’s promotional materials appear or in which the Company is discussed.
Any licenses or agreements such as patents, copyright, trade secret, other proprietary rights, proprietary info, or technology of the Company.
Patent Applications
All documents relating to all federal, state, and international trademark registrations and pending applications used in or associated with the Company.
Intellectual Property Rights
STATUS (HAVE, DON’T HAVE, N/A) descriptions of the products, their respective prices, and their stage of development.
Marketing Materials
All copyright registration records, including title documents and payment of renewal fees (for older copyrights).
Intellectual Property Policy
DUE DILIGENCE TOOL |. 10
Information about identifying, harvesting and protecting inventions.
Copyright Agreements
Copyright Restrictions
All documents relating to any restrictions or limitations on the use
All local or agreementsinternationaldealingwith right to sell products locally, trade secrets whether the Company is licensor or licensee.
Representative Agreements
All value-added reseller (VAR), original equipment manufacturer (OEM), and other reseller agreements.
Examples include HASP, organic, ISO, etc.
All agreements with any of the Company’s employees and former employees relating to the use of the company’s proprietary information.
Any documents related to [COUNTRY] or international compliance with environmental standards and any notice of breach or non-compliance with such licenses or certifications.
Product or CertificationsFacility
Trade Licenses
DOCUMENT COMMENTS
STATUS (HAVE, DON’T HAVE, N/A) of the copyright portfolio or thirdparty ownership rights.
DUE DILIGENCE TOOL |. 11
Use of Intellectual Property
Environmental Licenses or Certifications
Labor
7. COMPANY COMPANYREFERENCESCONTACT POSITION PHONE EMAIL a. Please list key contacts at all banks at which the Company is an account holder:
Company Lawsuits
Any correspondence or documents relating to any pending or threatened action, suit, proceeding, or investigation, including, without limitation, those involving the company’s employees in connection with their prior or present employment or use of technology.
Any correspondence or documents relating to any labor agreements or actions, union representation, strike or other labor dispute. memoranda, or notes concerning inquiries from federal, local or other government tax, environmental, occupational safety and hazard, or other officials.
DUE DILIGENCE TOOL |. 12 6. INFORMATION REGARDING DISPUTES AND POTENTIAL LITIGATION
DOCUMENT COMMENTS STATUS (HAVE, DON’T HAVE, N/A)
Tax Violations or Other Government Inquiries Correspondence,
Property Right Lawsuits
Any correspondence or documents relating to allegations of the company’s infringement of the proprietary rights of others. Lawsuits
DUE DILIGENCE TOOL |. 13 COMPANY CONTACT POSITION PHONE EMAIL
Please include other information that you believe [INV./FUND MANAGER NAME] should know in pursuit of an investment in the Company. If none, please mark N/A (not applicable):
d. Please provide three entities/contacts who sell supplies to the Company:
b. Please list the insurance agent(s) for the Company:
8. OTHER INFORMATION THE COMPANY WOULD LIKE TO DISCLOSE TO [INV./FUND MANAGER NAME]
c. Please provide three entities/contacts who buy products/services from the Company:
e. Does the Company have legal counsel (either outside/external legal counsel or an employee that is a lawyer)? If so, please provide their name and contact information below and indicate whether they will be representing the Company with respect to this potential investment.
IN WITNESS WHEREOF the parties hereto have executed this due diligence request on the ____day of ________ in the year of ___________.
DUE DILIGENCE AGREEMENT
Name: ________________________ Signature:
CHIEF EXECUTIVE OFFICER / SHAREHOLDER / OWNER
When all items have been provided to [INV./FUND MANAGER NAME], the Company and [INV./FUND MANAGER NAME] will verify that the due diligence request has been satisfied by signing below.
CHIEF FINANCIAL OFFICER / FINANCE MANAGER
Name: ________________________ Signature: [INV./FUND MANAGER NAME] REPRESENTATIVE
As a representative of [INV./FUND MANAGER NAME], I hereby acknowledge that the due diligence request has been satisfied.
As an owner of the Company, I hereby verify that the information provided to [INV./FUND MANAGER NAME] by the Company is true to the best of my knowledge. I also agree to abide by the U.S. Foreign Corrupt Practices Act of 1977 which requires transparent accounting and bans bribery of officials.
DUE DILIGENCE TOOL |. 14
As a CFO / Finance Manager of the Company, I hereby verify that the information provided to [INV./FUND MANAGER NAME] by the Company is true to the best of my knowledge. I also agree to abide by the U.S. Foreign Corrupt Practices Act of 1977 which requires transparent accounting and bans bribery of officials.
DUE DILIGENCE TOOL |. 15 Name: ________________________ Signature:
2. Is the Company in known violation of [COUNTRY] environmental regulations? If so, what is the Company’s plan, if any, for addressing this condition?
1. Does the Company possess a valid operating permit, licenses, approvals etc.? If not, what is the Company’s plan, if any, for addressing this condition?
5. Will the Company generate
NOTE: The following questions will be asked to address gender equality, environmental, health and safety matters in respect of the Companies. As different Companies require different types and levels of analysis, these questions are subject to change as dictated by need. In addition, an answer that demonstrates an issue at a Company is not necessarily disqualifying but may indicate a need for assistance in improving the Company’s operations.]
DUE DILIGENCE TOOL |. 16 EXHIBIT A SAMPLE DUE DILIGENCE QUESTIONNAIRE – GENDER EQUALITY, ENVIRONMENTAL, HEALTH AND SAFETY
water effluents that: would require a new permit violate [COUNTRY] effluent standards result in a long-term violation of [COUNTRY] water quality standards contaminate public drinking water supply contaminate underground water resources
3. Does the Company have any significant outstanding environmental fees, fines or penalties or any other environmental liabilities? If so, what is the Company’s plan, if any, for addressing this condition?
[
4. Have there been any complaints raised by local affected groups or NGOs regarding the impact of the Company’s operations on the air, soil, and/or water quality in the surrounding area? If so, what is the Company’s plan, if any, to remedy these complaints?
Please describe. 6. Will the Company generate air emissions that: would require a new permit violate [COUNTRY] air emission standards result in a long-term violation of [COUNTRY] air quality standards
DUE DILIGENCE TOOL |. 17 harm fish or aquatic ecosystems contaminate a natural habitat or protected area are difficult, expensive, or hard to control
are difficult, expensive, or hard to control are prohibited by the EMP Guidelines or recommendations If so, are there mitigation or risk containment strategies in place or contemplated?
If so, are there mitigation or risk containment strategies in place or contemplated?
are prohibited by [COUNTRY]’s General Guidelines on the Development of an Environmental Management Plan (EMP Guidelines)
release pollutants that affect downwind sensitive receptors (hospitals, schools, population centers, sensitive crops etc.) harm sensitive ecosystems (e.g., forests) materially and adversely impact a natural habitat or protected area
are difficult, expensive, or hard to manage are prohibited by EMP Guidelines or recommendations have a high risk of explosion, fire, or danger to workers
Please describe. 7. Will the Company consume, store, produce or utilize hazardous materials that: require special permits or licenses require licensed or trained personnel are outlawed or banned in EU or Western countries for the purposes for which the Company will utilize such hazardous material
10. List all company policies (e.g., health and safety, staff professional development, procurement, gender, forced/child labor, client protection, company code of ethics, conflict of interest, risk management, data security and privacy, community engagement, antidiscrimination, fair compensation, fair hiring, sexual harassment, etc.)
If so, are there mitigation or risk containment strategies in place or contemplated? Are there safety procedures or protocols for handling such hazardous materials? Please describe. 8. Will the Company be located within or close to sensitive areas such as: protected areas or areas under consideration by the Government for official protection status forested areas coastlines, wetlands, or other bodies of water
river valleys where well-preserved vegetation still exists
If so, are there mitigation or risk containment strategies in place or contemplated? Please describe. 9. Will the Company have a material and adverse impact on areas which are currently known as having local, regional or national cultural heritage significance? If so, is there a mitigation or risk containment strategy in place or contemplated?1 Please describe.
11. Are there documented grievance procedures for women and men employees to address issues such as sexual harassment and discrimination? If yes, please describe.
1 Questions 9 through 14 are pulled from the MEDA GEM Framework Full Assessment, available here: LINK
DUE DILIGENCE TOOL |. 18 are vulnerable to seismic, flood, terrorist attack, or other dangers
DUE DILIGENCE TOOL |. 19
14. Are there local rules and regulations that restrict women or men from participating more in the workplace? (e.g., maternity/paternity leave, property rights, access to transport, etc.) If yes, please describe.
12. Does the company consciously promote the values of inclusion, participation, equality, nondiscrimination, transparency and accountability? If yes, please describe.
13. Does the company have access to external advisors with gender expertise? (e.g., gender mainstreaming in human resources policies and practices, sales and marketing, procurement, environmental impact, etc.) If yes, please describe.