Every investor approaches due diligence differently. Some angel investors may request information in a detailed manner all at once, while others may simply request information at different times or stages. Regardless of an investor’s method to obtain information on a potential company, it is a proven fact that exercising thorough due diligence is indicative of more profitable returns. The following documents may be requested in due diligence.

General Corporate Materials
These documents include:

•  The company’s
  • articles of Incorporation (and all amendments)
  • bylaws (and all amendments), minute book (including all minutes and resolutions of shareholders and directors, executive committees, and other governing groups)
  • organizational chart
  • list of shareholders (and number of shares held by each)
• Copies of
  • agreements (relating to options, voting trusts, warrants, puts, calls, subscriptions, and convertible securities)
  • active status reports (in the state of incorporation for the last three years)
• A list of
  • all states where the company is authorized to do business (and annual reports for the last three years)
  • all states, provinces, or countries where the company owns or leases property, maintains employees, or conducts business
  • all of the company's assumed names and copies of registrations
• A Certificate of Good Standing from the Secretary of State of the state where the company is incorporated
  

Financial Information

• The most recent financial statements
  • that have been audited for three years (including the auditor's reports)
  • that have not been audited (including comparable statements of the previous year)
• The auditor's letters and replies for the past five years
• A schedule of
  • all indebtedness and contingent liabilities
  • inventory
  • accounts receivable
  • accounts payable
• A description of depreciation and amortization methods and changes in accounting methods over the past five years
• Any analysis of
  • projections, capital budgets, and strategic plans
  • fixed and variable expenses
  • gross margins
• If available
  • the company's credit report
  • analyst reports
• The company's general ledger
  
• A description of the company's internal control procedures
  

Physical Assets

• A schedule of
  • fixed assets and their locations
  • sales and purchases of major capital equipment during the last three years
• All U.C.C. (Uniform Commercial Code) filings
• All leases of equipment
  

Real Estate

• A schedule of the company's business locations
• Copies of all real estate leases, deeds, mortgages, title policies, surveys, zoning approvals, variances, or use permits

Intellectual Property

• A schedule of
  • domestic and foreign patents and patent applications
  • trademark and trade names
  • copyrights
  • (copies of) and copies of all consulting agreements, agreements regarding inventions, licenses, or assignments of intellectual property to or from the company
  • (summary of) any claims or threatened claims by or against the company regarding intellectual property
• A description of
  • important technical know-how
  • methods used to protect trade secrets and know-how
• Any
  • "work for hire" agreements
  • patent clearance documents

Employees and Employee Benefits

• A list of
  • employees, including positions, current salaries, salaries, and bonuses paid during last three years, and years of service
  • (and description of) benefits of all employee health and welfare insurance policies or self-funded arrangements
• A description of
  • all employee problems within the last three years, including alleged wrongful termination, harassment, and discrimination
  • any labor disputes, requests for arbitration, or grievance procedures currently pending or settled within the last three years
  • worker's compensation claim history
  • unemployment insurance claims history
• Copies of
  • collective bargaining agreements, if any
  • all stock option and stock purchase plans and a schedule of grants
• All employment, consulting, nondisclosure, nonsolicitation, or noncompetition agreements between the company and any of its employees
  
• Resumes of key employees
• The company's personnel handbook and a schedule of all employee benefits including holiday, vacation, and sick leave policies
• Summary plan descriptions of qualified and nonqualified retirement plans

Licenses and Permits

• Copies of any governmental licenses, permits, or consents
• Any correspondence or documents relating to any proceedings of any regulatory agency

Environmental Issues

• Environmental audits, if any, for each property leased by the company
• A list
  • of hazardous substances used in the company's operations
  • of environmental permits and licenses
  • identifying and describing any environmental litigation or investigations
  • identifying and describing any known superfund exposure
  • identifying and describing any contingent environmental liabilities or continuing indemnification obligations
• A description of the company's disposal methods
• Copies of all correspondence, notices, and files related to EPA, state, or local regulatory agencies

Tax matters

• Federal, state, local, and foreign income tax returns for the last three years
• States sales tax returns for the last three years
• Employment tax filings for three years
• Excise tax filings for three years
• Any
  • audit and revenue agency reports
  • tax settlement documents for the last three years
  • tax liens

Material Contracts

• A schedule of all subsidiary, partnership, or joint venture relationships and obligations, with copies of all related agreements
  
• Agreements
  • loan and bank financing contracts, line of credit, or promissory notes to which the company is a party
  • security, mortgages, indentures, collateral pledges, and similar contracts (including guaranties to which the company is a party)and any installment sale contracts
  • distribution, sales representative, marketing, and supply contracts
  • any options and stock purchase contracts involving interests in other companies
  • nondisclosure or noncompetition agreements to which the company is a party
• Copies of all contracts between the company and any officers, directors, five-percent shareholders, or affiliates
• Any letters of intent, contracts, and closing transcripts from any mergers, acquisitions, or divestitures within the last five years
• The company's standard quote, purchase order, invoice, and warranty forms
• All other material contracts

Product or Service Lines

• A list of all existing products or services and products or services that are under development
• Copies of all correspondence and reports related to any regulatory approvals or      disapprovals of any of the company's products or services  
• A summary of
  • all complaints or warranty claims
  • results of all tests, evaluations, studies, surveys, and other data regarding existing products or services and products or services under development
    

Customer Information

• A schedule of
  • the company's twelve largest customers in terms of sales thereto and a description of sales thereto over a period of two years
  • unfilled orders
• Any supply or service agreements
• A description or copy of
  • the company's purchasing policies
  • the company's credit policy
  • the company's major competitors
• A list and explanation for any major customers lost over the last two years
• All surveys and market research reports relevant to the company or its products or services
• The company's current advertising programs, marketing plans, budgets, and printed marketing materials

Litigation Issues

• A schedule of all pending litigation
• A description of any threatened litigation
• Copies of insurance policies possibly providing coverage as to pending or threatened litigation
• Documents relating to any injunctions, consent decrees, or settlements to which the company is a party
• A list of unsatisfied judgments

N. Insurance Coverage

• A schedule of
  • (and copies of) the company's general liability, personal and real property, product liability, errors and omissions, key-man, directors and officers, worker's compensation, and other insurance
  • the company's insurance claims history for past three years

Professionals

• A schedule of all law firms, accounting firms, consulting firms, and similar professionals engaged by the company in the past five years

Articles and Public Relations

• Copies of all advertising and marketing articles relating to the company within the past three years
• Press releases and clippings
• Analyst reports

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