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Tips and Answers
to Your Questions
Due Diligence
What should we be looking at in a due diligence investigation?
A substantial list of documents should be exchanged early in the negotiation
process for review by each party. The exchanged documents can then
either be reviewed by each organization’s attorneys and consultants,
or, more economically, by the negotiating committee itself.
Items to be exchanged
- IRS and state tax exemption letters
- Last year's (audited if possible) financial statements
- Most current financial statements
- A listing of all liabilities
- A description of the terms, conditions and status of all
current grants & contracts
- A listing of all leases of buildings and equipment
- A schedule of all assets
- Copies of any loans or liens against any assets
- A statement of whether any interested party (board member,
employee, their spouse or close relative) has an interest in
any asset owned by the corporation
- A statement describing any threatened or pending litigation
- A listing of all current employees, and their annual pay
level
- Copies of personnel policies, employment contracts, collective
bargaining agreements
- A description of all employee benefit programs, including
vendor contacts
- A copy of the most recent CT-2 filed with the California
Attorney General
- The names & addresses of the organization's financial
institutions
- A description of insurance coverage
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