Preparing Your Startup for Due Diligence
Preparing for due diligence is an opportunity to organize the information behind your business. A clear set of records helps you answer questions consistently and distinguish confirmed facts from forecasts and assumptions.
Organize the core documents
Create a structured index for the documents likely to be discussed. Depending on the proposed transaction, this may include:
- Company formation and ownership records
- Financial statements and management accounts
- Bank reconciliations and schedules of outstanding balances
- Tax filings and supporting records
- Material customer and supplier agreements
- Payroll information and employment records
- Loans, funding agreements and related-party transactions
Agree the actual information request with the advisers involved. The right scope depends on the business and the transaction.
Make the numbers traceable
Check that figures in presentations and financial models can be traced to accounting records or clearly identified assumptions. Explain unusual transactions and differences between reporting periods. Keep forecasts separate from historical results.
Track questions and missing information
Maintain a list of open items, the person responsible for each response and the supporting documents. Where information is incomplete, describe the gap clearly and agree how it will be addressed.
Manage access carefully
Share information through an agreed process and limit access to those involved in the review. Check how confidential business and employee information will be handled before providing it.
IAS Consulting provides financial and tax due diligence, financial modelling and transaction support. Contact us to discuss preparation for an investment or transaction.
