Mergers and Acquisitions For Dummies (70 page)

Listing of open purchase orders

Summary of the company's purchasing policies

Contracts with suppliers or descriptions of any significant supplier agreements

Buyer may want to contact certain suppliers, but as with making contact with customers, I recommend waiting until the end of the due diligence process before Seller grants this request.

Intellectual property

Intellectual property is an area that many skip over when thinking about due diligence. But make no mistake: a company's intangible assets may be among its most valuable. The following list covers the pertinent due diligence info:

Listing of all patents (including title, registration/application number, date of registration/application, initial expiration, and country of registration), patent registrations, trademarks, trade names, and copyrights

Listing of Internet domain name registrations

Summary of any claims made or threatened by or against the company over intellectual property

Human resources

A company's most valuable assets, especially for consulting and service firms, are the assets that enter and leave the building each day: the employees. A Buyer is wise to understand during due diligence how the company hires, compensates, and accounts for employees. This information can include

Organizational chart for the entire company

Listing of employees with details of hire date, position, job description, and current pay rate.

All agreements with employees and consultants (typically these include employment or consulting agreements as well as non-disclosure, non-solicitation, and noncompete agreements)

Key employees' résumés

Copies of executive compensation plans, including salaries, bonuses, commissions, vacations, club memberships, and so on

The company's employee handbook, including all employee benefits and holiday, vacation, and paid time off policies