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Due Diligence Ultimate Checklist: What You Need to Know
7 months ago by Lamia Massaad

Due Diligence Ultimate Checklist: What You Need to Know

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What happens when a company wants to enter a new business partnership? How can they be sure it’s a wise move?

The only way to determine the safety and value of a potential business transaction is by conducting a thorough investigation with the help of a due diligence checklist.

What is Due Diligence?

Merriam-Webster defines due diligence as:

“Research and analysis of a company or organization done in preparation for a business transaction (such as a corporate merger or purchase of securities).”

This is a crucial process typically used by investors and companies who are considering making a significant transaction such as the purchase of new equipment, when merging with another company, going into a joint venture or large contract, when buying a new property, or when adopting a new business information system into their operations.

Due diligence is a way for companies to practice caution and protect themselves by carefully reviewing all the risks and costs that stem from a big purchase. It is an in-depth investigation of the other party: their financial records, their operational practices, and an evaluation of their assets and liabilities. It’s a necessary process for discovering and avoiding any potential problems from occurring in the future.

Now that we’ve broken down the concept, let’s dive into the nitty-gritty: figuring out what data is necessary for a good due diligence checklist.

What is a Due Diligence Checklist?

It’s a document that includes all the essential data that the auditor must collect from their target before moving forward with their decision. It allows those conducting the due diligence audit to keep track of their progress so that they don't leave out essential data that will prevent them from making informed decisions during the deal's lifecycle.

What does a Due Diligence Checklist Include?

We asked our team of research and analysis specialists at Cedar Rose to identify what’s essential to include in due diligence checklists and evaluations. With over 20 years of experience conducting due diligence checks, we know what we’re talking about! The result boils down to these five essential categories:

1. Legal

Collect any paperwork that will help you understand and assess any legal risks that arise as a result of the transaction. It’s crucial to identify whether the target in question operates lawfully or if it has any significant legal issues. It also includes copies of commercial licenses (when made publicly available) to understand whether the company is active in the first place and to help our clients verify the commercial documents that they may have obtained already.

2. Compliance and Regulatory Matters

Regulatory due diligence is an in-depth evaluation of the regulatory compliance status of a company and its projects. The goal is to discover any regulatory inconsistencies that can decrease the value of the asset you wish to purchase. If you want to save your money, do your homework!

3. Commercial

This area of due diligence allows the acquirer to determine the commercial appeal and value of the company they’re purchasing. It analyses the market and how successful that company could be in that market. It requires a vast set of documents that covers the company's suppliers, commercial policies and customers.

4. Marketing

Unsurprisingly, the marketing audit helps buyers understand how a company markets itself. Vitally, though, it also helps identify what position it has within its specific market.

5. Financial

One of the most critical areas when conducting due diligence, it helps buyers understand whether the company is financially stable, its market value and if it has potential for growth. More importantly, financial due diligence investigates how accurate the financial records are and whether the target has any fundamental issues.

Due Diligence at Cedar Rose

At Cedar Rose, we offer five customizable levels of due diligence to help our customers assess and mitigate many of the risks mentioned in the checklist as part of the Know-Your-Client (KYC) process.

The first level, and what we’d recommend as a suitable starting point for every occasion, is Simplified Due Diligence. This check is perfect for instances where there is a small chance of risk that a business partner will become involved with illegal activities, such as money laundering, and when you only wish to authenticate the identity of your customer or business partner.

The second level is Standard (Plus) Due Diligence. It is the ideal solution for getting a more in-depth understanding of a prospective partner where we have already identified their potential risk level and determined that the chance of that risk materialising is minimal.

At the third level, we have Enhanced Due Diligence and Customer Due Diligence. Both checks aim to give our clients a more comprehensive understanding of their most valued or high-risk business relationships. And of those, it identifies where our research has raised red flags regarding their legitimacy and trustworthiness.

The fourth due diligence evaluation is the Local Reputation Investigation (Source Enquiries). Here we perform multiple checks to determine what your business partner's reputation is. For this, we use informal sources to determine the following:

·         The target’s network (Commercial/Professional/Institutional/Political)

·         If there is evidence of involvement in financial crime

·         If there are links with terrorism groups

·         What the extent of their social and environmental responsibility is

·         Other general reputational checks

Finally, we have Ultimate Beneficial Ownership (UBO), where we use official corporate information to reveal the company’s UBO structure and the individual(s) who are the primary beneficial owner(s). Contact us if you would like this type of investigation.

All five investigations are handled without the subject being notified and with the utmost confidentiality.  

Final Thoughts

Due Diligence is a vital tool for assessing the real value of a business deal. Without first performing a due diligence check before following through with a sizeable business deal, you could end up significantly harming your business in multiple ways. Not only will you potentially lose a large sum of money, but you could also damage your reputation and lose the confidence of your customers and partners.

A due diligence checklist is a highly effective method to keep you organised and on track while you are doing an audit. Powered by the brains of our experts at Cedar Rose, the above list is an excellent starting point for your inspection. However, keep in mind that every business deal is unique, and therefore, each transaction might carry different requirements—or need you to be diligent in other areas!

When you want to perform an audit, our five customizable due diligence checks and our extensive database of 12 million companies, with over 7 million directors and shareholders, is a must. We take great pride and effort to ensure that our database is as accurate as possible, because it is a critical aid to the credit and due diligence reports we perform on behalf of our clients. If you are interested in using our database or wish to inquire about our due diligence services, kindly visit our website at cedar-rose.com or contact us at +357 25 346630.


  • Due Diligence
  • Investigation
  • Research
  • Data
  • #UBO