I History and brief description of business1 History and
development of the company and the activities undertaken.2 The
corporate structure of the group.II Management and employees1
Management structure2 Details of the directors and senior
management, including ages, qualifications, length of service and
previous experience and other directorships.3 Remuneration of
directors and senior management, terms of employment including
details of service contracts, commission payable, benefits, loans
and expenses, if applicable.4 Brief assessment of management
ability (strengths/expertise/weaknesses).5 Details of personnel and
management structure number of staff by area, wage rates, ages,
union agreements, terms of employment, etc. Details of lines of
command and group structure.6 Broad details of workforce including
terms of employment, numbers and remuneration policy.7 Dates of
salary/wage reviews and current position on such.8 Details of
profit-sharing and bonus schemes.9 Staff relations and details of
any trade union representation.10 Details of pension schemes and
indication of funding position.III Accounting systems and
management information1 A description and assessment of the
financial records, the management information produced and the
system of internal control.2 A brief description and assessment of
the costing systems and the budgetary control and forecasting
systems.3 Details of material year-end, non-recurring and other
adjustments made to management accounts.IV Accounting policies1
Details of the accounting policies adopted by the company and
details of any changes in policies during the last three years.2
Detailed explanation of methodology for revenue recognition.V
Trading results1 A summary of results for the last financial
periods.2 A summary of results from the date of the last financial
year end.3 A breakdown of sales and gross profit contribution for
the periods set out in paragraphs 1 and 2 above analysed by each
main activity/product group with an explanation of the effect of
anyvolume changes and any significant changes in margins and
composition of direct costs incurred.4 An analysis of subcontractor
costs incurred, detailing the monthly payments for each contractor
for the last financial year.5 Where staff have left or been made
redundant, details of arrangements and payments made to individuals
concerned6 Analysis of rent and rates costs for the last financial
year.7 Analysis of overhead expenses together with comments on
significant fluctuations.8 An explanation of and comments on trends
disclosed by the results, including relevant notes of any
exceptional profits or losses, the impact of inflation, currency
fluctuations, seasonal and any other significant contributory
factors.VI Premises1 Details of company premises, including
location, form and terms of tenure, site area, current usage, date
of acquisition, cost and subsequent expenditure.2 Details of any
property disposals in last 6 years.3 Details of any impending or
deferred repairs if material.VII Intellectual property rights1
Details of all intellectual property rights held by the
company.VIII Net assets1 A summary statement of the balance sheets
as at year end and the previous financial year end.2 An analysis of
and comments on the composition of assets and liabilities as at
year end and the previous financial year end.3 A funds flow
analysis for the last financial year.4 A schedule of daily bank
balances for the last financial year.5 Details of any current,
pending or threatened litigation or legal proceedings.6 Details of
any material long-term and/or onerous contracts.7 Details of
material contingent liabilities.8 Details of major items of capital
expenditure since the last accounting date and details of any
outstanding capital commitments.9 Details of capital structure,
including a list of individual shareholders and distributable
reserves.10 Fixed assets, including depreciation policy, and
details of any surplus assets. Details of any leased assets.11
Details of banking facilities.12 Summary of insurance cover.IX
Review of Group budgets and projections1 The basis of preparation
of the projections.2 An explanation of the assumptions made by the
Directors.3 Review of pipeline underpinning sales assumptions.4
Consideration of the reasonableness of the assumptions made.5
Consider sensitivities of the projections to changes in assumptions
(principally revenue and personnel and other resources that would
be flexed accordingly).X Taxation1 Details of the current positions
with regard to the agreement of taxation liabilities and
assessments for corporation tax.2 Review of corporation tax
computations for last 6 years.3 A review of the position of HM
Revenue and Customs in relation to VAT and PAYE, respectively.
Identification of any penalties and/or interest incurred.4 Details
of any enquiries, control visits or correspondence with HMRC.5
Details of any share option schemes.XI General1 Any other factors
which might materially affect the prospects of the company and its
subsidiaries and any other matters which appear relevant in the
context of the current proposal.AREAS NOT COVERED BY FFINANCIAL DD
REPORT:Markets1 A description of the main business areas/products.2
An analysis of sales in quantity/volume, value and by outlet,
including details of sales trends and product mix (as
appropriate).3 A description of the customer base and an assessment
of market share.4 Terms of trade, including pricing and profit
margin policy, credit arrangements, significant agreements for
sales or purchase, agency agreements and exports.5 Where relevant,
details of firm orders outstanding by product line at the current
date and details of fluctuations in the level of orders
outstanding.Purchasing organisation1 Details of service delivery,
internal and external resource management.2 Details of customer
contract terms and agreements.3 Details of future strategy, any new
activities planned or recently commenced or terminated.4 Details of
principal suppliers and relevant agreements and alternative sources
of supply.5 Details of advertising and promotional policy and
expenditure.6 Details of development expenditures planned.Outline
of areas to be covered by Commercial Due Diligence1. Product
analysis2. Current market (and competitors) analysis3. Developments
in the market4. Potential new markets5. Barriers to entry6.
Production facilities and manufacturing efficiency/effectiveness7.
Strategic investment needs8. Purchasing strategies and supply chain
effectiveness9. Information technology10. Research and development
facilities/strategy11. Environmental matters12. Management
effectivenessOutline of areas to be covered by Legal Due
Diligence1. Constitution and ownership of holding company2.
Constitution and ownership of significant subsidiaries, associated
companies and investments3. Recent acquisitions and disposals
(including merger control problems and on-going warranties)4.
Tangible property (owned and leased)5. Intellectual and other
intangible property6. Major contracts (including management service
contracts)7. Debt agreements8. Pension obligations9. Litigation and
disputes10. Guarantees and other contingent liabilities11.
Warranties (including taxation)12. Environmental regulation,
permits and liabilities13. Compliance with other regulations and
laws14. Impact of change of control
