Manufacturing due diligence checklist: what a buyer will ask for
Diligence requests look arbitrary until you understand what each item is testing. This list covers what buyers of Carolinas manufacturing companies ask for and why, so an owner can assemble it in advance rather than under a 60-day exclusivity clock.
Assembling this before going to market is the single most reliable way to keep a deal on schedule, because nearly every delay in a manufacturing transaction traces back to a document nobody could find.
| Document | What the buyer is testing | Prepare it |
|---|---|---|
| Three years of financial statements plus tax returns | Whether reported earnings reconcile to what was filed | Before going to market |
| Add-back schedule with supporting documents | Whether each adjustment to EBITDA is real and repeatable | Before going to market |
| Revenue and gross margin by customer, three years | Concentration, durability, and which revenue is actually profitable | Before going to market |
| Monthly financials for the trailing twelve months | Seasonality and the working capital cycle behind the closing target | Before going to market |
| Equipment list with year, hours, control, and maintenance history | Remaining capability and the five-year capital plan | Before going to market |
| Tooling schedule with title and location | Which programs could leave with a customer-owned mold or fixture | Before going to market |
| Quality registration certificates and audit history | Whether the system reflects practice or exists on paper | Before going to market |
| Customer contracts, long-term agreements, and purchase order terms | Whether revenue is committed or a release against a forecast | Before going to market |
| Supplier agreements and material pass-through terms | How much input price risk transfers to the buyer | Before going to market |
| Phase I environmental site assessment | Site history and any recognized environmental condition | Seller-commissioned, before market |
| Air, wastewater, and stormwater permits with compliance history | Permits follow the plant, so the buyer inherits the conditions | Before going to market |
| Corporate records: minutes, stock ledger, operating agreement | That the seller can actually convey what is being sold | Before going to market |
| Real property deeds, leases, and any related-party rent | Whether operating results are normalized to market rent | Before going to market |
| Employee census, wage detail, and benefit plans | The real cost of the workforce and any hidden liabilities | At diligence |
| Insurance policies and five-year loss runs | Claims history and whether coverage has been adequate | At diligence |
| Litigation, warranty, and product liability history | Contingent liabilities and how they were handled | At diligence |
| Backlog with job-level margin, for fabricators | Whether signed work carries the margin the earnings imply | Before going to market |
| ITAR registration and export control procedures, where applicable | Compliance standing and change-of-control notification requirements | Before going to market |
A seller who can produce the first thirteen items on request converts diligence from an investigation into a confirmation. That changes the tone of the entire transaction, and it removes the mid-process repricing that happens when a buyer discovers something the seller did not know.
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