A due diligence checklist provides attorneys with a system to collect, understand and evaluating information gathered during complex or simple legal procedures. A due diligence checklist is useful for M&A activities such as vendor onboarding, due diligence on behalf of the customer to help with anti-money laundering compliance (AML) and Know-Your-Customer (KYC). It can increase efficiency, offer an improved service to clients, and ensure that important information is not missed.
A due diligence checklist that is effective will concentrate on the most important aspects of a transaction as well as the documents pertinent to each one. This will enable the reviewer of the due diligence checklist to identify any potential legal issues that might arise from the merger or purchase and decide if the transaction is worth it.
Due diligence should include a thorough examination of contracts, intellectual properties and compliance with the law. Additionally, it should check on the financial stability of the vendor including credit and checking statements, reports, and evaluating the capabilities and capacity of the company. A due diligence checklist for a business should also consider how employees are treated. This includes looking at pay, benefits, vacation time accumulated or given and determining whether the company is in compliance to environmental standards.
Due diligence should also include a screening of third parties against the databases of law enforcement agencies like Interpol or the FBI or the National Crime Agency of the UK as well as any other countries who are affiliated with them for signs of money laundering, terrorist crime, or corruption. This is particularly important in virtual due diligence rooms dealing with high-net-worth people known as PEPs. Interviews with important stakeholders and vendors are also essential for conducting a thorough due diligence. This will allow you to learn about the culture of the business and the issues it faces.