M&A Due Diligence Checklist

Comprehensive due diligence organized by domain. Not every item applies to every deal — focus on what matters for YOUR acquisition rationale.

Financial Due Diligence

Revenue Quality

• Revenue by customer (top 10 customer concentration)
• Revenue by product line
• Revenue by geography
• MRR/ARR trend (24 months minimum)
• Churn rate (gross and net, by cohort)
• Revenue recognition policies
• Deferred revenue / backlog
• One-time vs recurring revenue split
• Professional services vs product revenue

Profitability

• Gross margin by product line
• Operating expenses breakdown
• Burn rate trend (improving or worsening?)
• Path to profitability (realistic or aspirational?)
• Unit economics (LTV, CAC, payback by channel)

Cash & Liabilities

• Cash position and burn rate
• Outstanding debt (terms, covenants)
• Accounts receivable aging
• Accounts payable
• Pending or contingent liabilities
• Tax obligations (any back taxes?)
• Cap table (fully diluted, option pool)

Financial Controls

• Audit history (audited vs reviewed vs compiled)
• Financial reporting cadence and quality
• Budget vs actual variance history
• Key financial policies

Technical Due Diligence

Architecture

• Architecture diagrams (current state)
• Technology stack inventory
• Infrastructure (cloud provider, regions, costs)
• Scalability assessment (current capacity vs load)
• Security architecture (encryption, access controls)

Code Quality

• Test coverage (unit, integration, e2e)
• CI/CD pipeline maturity
• Technical debt inventory (estimated remediation cost)
• Code review practices
• Documentation quality

Data

• Data architecture and storage
• Data privacy compliance (GDPR, CCPA)
• Data portability (can you migrate it?)
• Proprietary data assets (training data, user data)
• Data retention policies

Operational

• Uptime history (SLA compliance)
• Incident history (frequency, severity, resolution time)
• Monitoring and alerting coverage
• Disaster recovery plan and testing history
• On-call rotation and processes

Legal Due Diligence

Intellectual Property

• Patents (granted and pending)
• Trademarks
• Copyright registrations
• IP assignment agreements (all employees/contractors)
• Open source usage and compliance
• Trade secrets protection measures

Contracts

• Customer contracts (terms, renewals, termination rights)
• Vendor contracts (key dependencies, terms)
• Partnership agreements
• Lease agreements
• Employment agreements (non-competes, IP clauses)

Compliance & Litigation

• Pending or threatened litigation
• Regulatory compliance status
• Government investigations
• Insurance coverage
• Prior legal disputes and resolutions

People Due Diligence

Team Composition

• Org chart with roles and tenure
• Key person dependencies (bus factor)
• Compensation details (salary, equity, bonuses)
• Employment agreements and non-competes
• Contractor vs employee classification

Culture & Retention

• Recent engagement survey results
• Turnover rate (last 12-24 months)
• Glassdoor/reputation assessment
• Management quality assessment
• Culture compatibility analysis

HR Compliance

• Employee handbook and policies
• HR complaints or investigations
• Benefits programs
• Equity plan details and administration

Market Due Diligence

Market Position

• Market size (TAM, SAM, SOM) with sources
• Market share estimate
• Growth rate (market and company)
• Competitive landscape (direct and indirect)
• Barriers to entry / competitive moat

Customer Analysis

• Customer segmentation
• Win/loss analysis (why customers chose them)
• NPS or satisfaction scores
• Customer acquisition channels
• Customer lifetime and expansion patterns

Red Flag Severity Guide

Due Diligence Timeline

Post-Acquisition Integration Playbook

The 100-day plan for integrating an acquisition. Most acquisitions fail not because of bad deals but bad integration.

The Integration Paradox

Move too fast → you break what you bought. Move too slow → talent leaves, customers churn, value evaporates.

The rule: Decide on day 1 what stays separate and what merges. Then execute without wavering.

Pre-Close (Day -30 to 0)

Integration Lead

• Appoint ONE integration lead (not a committee)
• This person reports to the CEO, has authority over all workstreams
• Full-time role for 100 days minimum

Planning

Communication Plan (ready before close)

• Employee announcement (both companies) — Day 1
• Customer notification — Day 1-3
• Partner/vendor notification — Week 1
• Public announcement — per deal terms

Week 1 (Days 1-7): Stabilize

Goal: No one leaves, no customer churns, operations continue.

• All-hands meeting (both companies together)
• 1:1 with every acquired leader (within 48 hours)
• Retention packages confirmed for key employees
• Customer communication sent (personal for top 20 accounts)
• Systems access provisioned (email, Slack, tools)
• Integration FAQ published internally

The First All-Hands

What people want to hear:

1. Why this happened (honest version)
2. What changes (be specific, not vague)
3. What doesn't change (equally important)
4. Their job security (be direct)
5. Timeline for decisions

What NOT to say: "Nothing will change." (It will. They know it.)

Month 1 (Days 1-30): Orient

Goal: Teams know each other, quick wins shipped, blockers identified.

People

• Org chart finalized and communicated
• Comp band alignment completed
• Benefits transition timeline published
• Cross-team introductions facilitated (not forced)
• Culture assessment: what's different, what's compatible

Technology

• Architecture assessment complete
• Migration priority ranked (quick wins first)
• Shared development environment established
• Code access and permissions set up
• Technical debt from both sides documented

Customers

• Top 20 accounts contacted personally by leadership
• Unified support channel established (or plan for it)
• Pricing/contract transition plan for overlapping customers
• Product roadmap communication (what's coming, what's being deprecated)

Quick Wins

Ship something visible in the first 30 days. A feature that combines both companies' strengths. This proves the acquisition works better than any memo.

Month 2-3 (Days 31-100): Integrate

Goal: Core systems merged, one team operating, value creation visible.

Systems Integration Priority

1. Communication (Slack, email) — Week 2
2. Identity (SSO, accounts) — Week 3
3. Development (repos, CI/CD) — Month 1
4. Data (analytics, CRM) — Month 2
5. Product (shared platform) — Month 2-3
6. Finance (billing, reporting) — Month 3

Culture Integration

• Don't: Force the acquired team to adopt everything immediately
• Do: Find the best practices from BOTH cultures, adopt the winner
• Don't: Rename everything on Day 1
• Do: Co-create the combined identity over 60 days
• Watch for: "Us vs them" language, meeting exclusions, information hoarding

Measuring Integration Success

Post-100 Days

Integration isn't "done" at 100 days. But the foundation should be solid.

Ongoing

• Quarterly integration retrospective (what's working, what isn't)
• Culture health check at 6 months
• Full financial integration assessment at 12 months
• Earnout milestone tracking (if applicable)

Common Failure Modes

The Kill Switch

Sometimes acquisitions don't work. Signs it's failing:

• Key people leaving despite retention packages
• Customers churning above baseline
• Integration milestones consistently missed
• Culture clash worsening, not improving
• Revenue synergies aren't materializing at month 6

Options:

1. Double down with new integration lead and plan
2. Operate as semi-autonomous unit (less integration)
3. Spin off or divest (expensive, but sometimes necessary)

Admitting failure early costs less than dragging it out.