This 6-page document outlines a due diligence checklist for investing in a business. It includes over 70 individual items across 6 categories: 1) general corporate compliance and organizational information, 2) financial and tax information, 3) employment and labor matters, 4) business contracts and commitments, 5) intellectual property, and 6) equipment and personal property. The checklist provides a comprehensive guide for investors to review key documents, agreements, policies, and other information about a target business prior to acquisition.

1. Due Diligence Checklist
for Investing in a Business
Prepared by
Aaron Rose
President and CEO, ROI3, Inc.
© 2016 ROI3, Inc.
All Rights Reserved
@ROI3inc #ROI3
www.roi3.com
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2. Due Diligence Checklist
for Investing in a Business (1 of 6)
1. General Corporate Compliance/Organizational Information
A. Review the articles of incorporation and bylaws of the company, and any/all
amendments;
B. Review the minute book of the company;
C. Verify that the company is duly incorporated and in good standing in the state of
its incorporation;
D. Verify that the company is qualified to do business in all states in which it
transacts business;
E. Review all stock certificates and determine the number and type of the
authorized and issued shares of stock of the company and the registered owners
of the issued and outstanding shares;
F. Determine whether there are options, warrants, or other rights to acquire shares
outstanding;
G. Review stock transfer records of the company;
H. Review all agreements between the company and its shareholders; and
I. Review securities law filings under state and federal securities laws.
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© 2016 ROI3, Inc.
All Rights Reserved

3. Due Diligence Checklist
for Investing in a Business (2 of 6)
2. Financial and Tax Information
A. Review the financial statements, balance sheets and income statements of the company, including all
profit and loss statements for the current year and the past five years;
B. Review all budgets, business plans, projections and management reports prepared by the company within
the past five years;
C. Review the company’s accounts payable, including their quality, aging and composition, and determine if
there are any disputed accounts;
D. Secure credit reports;
E. Review any forecasted income statements and balance sheets, if available, for both the current and
following fiscal years, or for such periods as forecasts have been prepared, and the assumptions upon
which the forecasts are based;
F. Review company’s pricing policies and compliance;
G. Review company’s inventory valuation, turnover and obsolescence review;
H. Determine whether the company has any secured financing, including accounts receivable or inventory
financing, and review all documents associated with that financing;
I. Review and create a list of names and locations of all banks utilized by the company including full
information on the types of accounts and the names of persons authorized to draw thereon;
J. Review all bank loan agreements;
K. Review all federal, state, and local income tax returns of the company for the past five years;
L. Obtain copies of property tax assessments for the past five years;
M. Communications between the company and the IRS, including, without limitation, audit and revenue
agent’s reports (federal, state and local); settlement and consent documents and correspondence; and
agreements waiving statute of limitations or extending time; and
N. Copies of documents relating to IRS or state tax proceedings, deficiencies assessed, or audits commenced.
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www.roi3.com
© 2016 ROI3, Inc.
All Rights Reserved

4. Due Diligence Checklist
for Investing in a Business (3 of 6)
3. Employment and Labor Matters
A. Obtain a list of the company’s employees, their job classifications, compensation, and length of
employment;
B. Review all employment agreements;
C. Review all indemnification contracts or similar arrangements for officers and directors of the Company;
D. Review all of the company’s employee benefit plans, including retirement plans, pension plans, profit-
sharing plans, deferred compensation plans, health insurance, and other employee health and welfare
plans;
E. Review all documents relating to employee stock option plans, incentive stock option plans, employee
stock purchase plans, stock bonus plans, salary bonus plans and any other benefit plans or arrangements;
F. Review the company’s personnel manual and all documents furnished to employees in connection with
their employment;
G. Review the current and proposed organizational structure of the company;
H. Determine whether there are any claims by employees or government agencies, or investigations,
pending against the company arising out to employment matters, including discrimination claims,
grievances, arbitration cases, workers’ compensation cases, OSHA cases, labor disputes and similar
matters;
I. Review the company’s relationship with independent sales agents and other independent contractors
with whom the company deals on a regular basis;
J. Review all collective bargaining and union agreements to which the company is a party; and
K. Review any copies or schedules of contracts, plans, or arrangements regarding election or termination of
directors and officers.
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www.roi3.com
© 2016 ROI3, Inc.
All Rights Reserved

5. Due Diligence Checklist
for Investing in a Business (4 of 6)
4. Business Contracts and Commitments
A. Obtain a list of the company’s major suppliers, the goods or services supplied, and annual
dollar volume of business with the company;
B. Review copies of all agreements between the company and its major suppliers;
C. Obtain a list of the company’s major customers, the goods or services supplied, and annual
dollar volume of business with the company;
D. Determine whether there are currently, or have in the past been material disputes between
the company and its suppliers or customers;
E. Review all agreements pertaining to the marketing and distribution of the company’s
products or services, including all agreements with independent sales representatives,
distributors, marketing companies and franchisees;
F. Review all material agreements with customers, including warranties provided to
customers;
G. Review all installment sales agreements;
H. Review all forms of sales invoice, purchase order, receipt, agreements, and other sales
documents used by the company;
I. Review documents describing the company’s products or services such as promotional
literature, brochures, and newsletters;
J. Review copies of any license or royalty agreements;
K. Review any sale-leaseback arrangements; and
L. Note any membership agreements or other relations with trade associations.
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www.roi3.com
© 2016 ROI3, Inc.
All Rights Reserved

6. Due Diligence Checklist
for Investing in a Business (5 of 6)
5. Intellectual Property
A. Review all material license agreements relating to intellectual or intangible
property running to and from the company;
B. Create a list of all patents, trademarks and copyrights held by or licensed to the
company;
C. Review all documents relating to patents and trademarks including filings with
U.S. Patent and Trademark Office;
D. Note any policies and procedures relating to identification and protection of
trade secrets and other confidential information developed by the company
and/or disclosed to the company under a covenant of nondisclosure;
E. Review the technological infrastructure of the company, including: proprietary
hardware, software systems, and networks; all leased, purchased, or shared
hardware, software systems, and networks; all interconnecting hardware,
software systems, and networks’; environmental systems, including vaults, alarm
systems, elevators, and telephones; and
F. Review sales contracts for hardware and software systems, including warranty
provisions, licensing agreements, operating agreements, maintenance and
service contracts, consulting agreements and other strategic business
relationships pertaining to data processing and information technology.
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www.roi3.com
© 2016 ROI3, Inc.
All Rights Reserved

7. Due Diligence Checklist
for Investing in a Business (6 of 6)
6. Equipment and Personal Property
A. Obtain a list of all machinery, equipment, furniture, and fixtures
owned or leased by the company and depreciation schedules and
leases;
B. Review any installment purchase agreements;
C. Review service contracts on tangible personal property of the
company;
D. Obtain an inventory list, including category and aging information;
E. Review the company’s accounts receivable records, including age,
composition and write-off history;
F. Review information about the company’s trade secrets and evaluate
the company’s trade secret protection program; and
G. Obtain a search of appropriate state and local records for U.C.C.
financing statements and other evidence of liens or encumbrances.
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www.roi3.com
© 2016 ROI3, Inc.
All Rights Reserved