M&A Agency Investor Checklist (Required)
Purpose: require rigorous, explicit answers before a deal can advance through M&A orchestrator stage gates.
Use this checklist during diligence and update it before LOI, confirmatory diligence, and close.
Completion policy:
- Every question must have an explicit answer, evidence source, and owner.
- Unknowns must be tagged with owner + due date.
- Critical unknowns block stage advancement.
Understanding the company — the basics
- Do I want to spend a lot of time learning about this company?
- How would you evaluate this company if you were to become its CEO or Chairman of the board?
- Can you describe how the company operates, in your own words?
- What services does the company sell to make money?
- How has the company evolved over time?
- (When abroad) In what foreign markets does the company operate, and what are the risks of operating in these countries?
Understanding the company — from the client perspective
- Who are the core clients of the company?
- Is the client base concentrated or diversified?
- Is it easy or difficult to convince clients to buy the services?
- What is the client retention vs churn rate for the company?
- What are the signs a company is client-oriented?
- What pain does the company alleviate for the client?
- To what degree is the client dependent on the services/team/results from the company?
- If the company disappeared tomorrow, what impact would this have on the client base?
Evaluating the strengths and weaknesses of the company and type
- Does the company have a sustainable competitive advantage and what is its source?
- Does the company possess the ability to raise prices without losing clients?
- Does the company operate in a good or bad segment of the marketplace?
- How has the company segment evolved over time (for example, print, advertising)?
- What is the competitive landscape, and how intense is the competition (regionally, online, etc.)?
- What type of relationship does the company have with its partners?
Measuring the operating and financial health of the company
- What are the vision/mission/values/principles of the company?
- What are the operating metrics of the company that are currently monitored vs need to be monitored?
- What are the key risks the company faces?
- How do market changes (for example, COVID) and inflation affect the company?
- Is the company’s balance sheet strong or weak?
- What is the return on invested capital for the company?
Evaluating the distribution of earnings (cash flows)
- Are the accounting standards that management uses conservative or liberal?
- Does the company sell performance-based engagements, recurring, or one-off transactions?
- To what degree is the company cyclical, countercyclical, or recession-resistant (for example, fully distributed, geo-diversified, etc.)?
- To what degree does operating leverage (relationship between fixed and variable costs) impact company earnings?
- How does working capital impact company cash flows? How is the company calculating working capital?
Assessing the quality of management — background and classification
- What type of executive is leading the company (leader, boss, manager, or a combination)?
- What are the effects on the company of bringing in outside management, ownership, and/or leadership?
- Is the executive a lion or a hyena?
- How did the executive rise to lead or start the company?
- How are senior managers/leaders compensated, and how did they gain their ownership interest, if any?
Assessing the quality of company management — competence
- Does the CEO manage the company to benefit themselves or all stakeholders?
- Does the management team improve operations day-to-day, or use a strategic plan to develop the company?
- Does the owner, CEO, or CFO/bookkeeper have a methodology regarding earnings?
- Is the company managed in a centralized or decentralized way?
- Does leadership or management value its employees?
- Does the management team know how to hire well?
- Does the management team focus on cutting unnecessary costs?
- Are executives disciplined in making capital-allocation decisions?
Assessing the quality of management — positive and negative traits
- Does the CEO love the money or the company?
- Can you identify a moment of integrity for the manager?
- Are managers clear and consistent in communications and actions with employees?
- Does management think independently and remain unswayed by what others in their industry are doing?
- Is the CEO self-promoting?
Evaluating company growth opportunities
- Does the company grow through mergers and acquisitions, or organically?
- What is the management team’s motivation to grow the company?
- Has historical growth been profitable and will it continue?
- What are the future growth prospects for the company?
- Is the management team growing the company too quickly or at a steady pace?
Checklist completion record (required)
- Target: [ ]
- Stage: [Screen | Qualify | Diligence | LOI | Confirmatory | Close]
- Completion percentage: [ ]
- Critical unanswered questions (count): [ ]
- Owner: [ ]
- Last updated: [ ]