Appendix C Sample Due Diligence List

• Jurisdiction: United States

Appendix C Sample Due Diligence List

The following list of due diligence items is provided as a starting point for evaluating prospective financial information. The items listed may or may not be directly relevant to the inquiry undertaken. The list is not comprehensive, and the scope of inquiry will depend on the facts and circumstances of each individual situation. Broadly, an assessment of budgets, forecasts, projections, pro forma and other prospective financial information should include inquiries into the economy, industry and company-specific factors pertaining to past actual performance and a range of future prospective outlooks that are pertinent to forming a reasoned opinion about the prospects of achieving the future outcome(s) under evaluation. See also the related discussions in Chapters 6 and 7 and the related topics pertinent to normalization analysis in Appendix D.

Evaluation of forecasts, projections, budgets and pro forma financial statements constitutes a broad review of the business, its recent past, current status and future outlook. It is a task that inherently requires judgment to determine the relevance of a vast array of information about the business and its management. The following lists of documents and other information are often requested in connection with the business enterprise(s) under review. Documents may or may not be directly relevant to the specific areas of inquiry. Additional items may be needed as the review progresses. Language and definitions of terms may also vary. The historical time horizons reviewed frequently encompass three to five years of actual results. Future years often encompass three to five years of prospective information, but may be limited to one to two years depending on management's practices. It is up to the financial analyst, valuation professional and counsel to assess the range of information that is available and necessary for the situation, given the facts and circumstances of the valuation and any related litigation.

I. Company Background and Information and Corporate Governance

1.1 All Board of Director meeting minutes, Board packages (financial and operational) and presentation materials

1.2 Organizational charts (time series)

1.3 Corporate timelines, or documents pertaining to the chronology of notable events (e.g., acquisitions/divestitures, corporate actions, capital funding, executive turnover, etc.)

1.4 All business plans (both Board-approved and internal)

1.5 Compensation agreements for all family member beneficiaries, including any family trust (i.e., children's or other trusts)

1.6 A list of entities in which the company or any of its subsidiaries has a direct or indirect equity or other economic interest (including, without limitation, any partnerships or joint ventures), together with the ownership percentage of the company or applicable subsidiary

1.7 List of all equityholders, including all options, warrants and any other potentially dilutive securities

1.8 FEIN and organizational ID numbers for all entities and related operating subsidiaries

1.9 List of jurisdictions where company is qualified to do business

1.10 All assumed fictitious or other business or trade names under which the company is or has conducted business

1.11 List of all material acquisitions, restructurings, reorganizations, dispositions, sale-leasebacks, repurchases or other significant transactions and copies of all related agreements

1.12 Parcel ID for all real estate holdings held during any part of the Defined Time Period

1.13 All management contracts

1.14 All reports and other communication to equityholders, the Board of Directors, or management including but not limited to:

1.14.1 Independent public accountant audit reports

1.14.2 Internal audit reports

1.15 All appraisals and valuations of assets and the business prepared for the company or its investors or lenders

II. Financial Information

Debt and Collateral

Comprehensive list of all outstanding debt agreements, including offering prospectuses and covenant analyses

11.2 Notes/documents/correspondence related to all loans/notes/secured financing arrangements

11.3 All construction and other loan agreements pertaining to or guaranteed by related entities

11.4 Loan defaults

11.5 All guarantees of third-party obligations

11.6 Mechanics liens, mortgages, security agreements, pledges, charges and collateral...