M&A Due Diligence Checklists - Sales, Marketing, and Operations

Comprehensive 95-page sales, marketing, and operation guide to conduct thorough, effective due diligence.


One of the most difficult aspects in business evaluation is understanding and justifying forecasts of future revenues. Section I of this guide provides a micro-style analysis of marketing and sales. The section asks numerous specific questions about twenty-five company functions that, together, address the ability of a business to gain and retain profitable customers.

Sections II through VI help the analyst develop a macro evaluation of the ability of other functions and departments to deliver on marketing’s promises to customers and prospects. These sections are not designed to provide complete due diligence level information in the areas of operations, finance, technology, legal, or organizational design. Rather, they help the analyst put marketing functions into an overall context and understand the operating capacity of the entire company.

Section VII acts as a strategic summary, where detailed facts gathered earlier can be consolidated into an overall perspective of the company and its relative position in the industry. The summary helps the analyst develop and support conclusions.

The additional information gathered during the analysis may lead to new insights and a desire to modify the company’s focus. Existing long-term goals and forecasts may also require review and adjustment.

Business analyses versus business valuation

Experience indicates that business analyses often concentrate on past results and detailed financial records. Many who conduct business analyses have financial, banking, or legal backgrounds. Analysts are most comfortable with hard numbers and past ratios. Yet, the future prospects of a business may depend heavily upon the leadership ability of a small group, and on the marketing team’s ability to gain and retain profitable business.

The Marketing and Sales Due Diligence Guide is a supplemental guide to business analysis, not a complete means of performing a business valuation or business due diligence appraisal in the strict legal or financial sense. However, in the hands of a qualified specialist, this workbook will offer additional insights to assist the analyst in arriving at a final company valuation or due diligence appraisal. This guide offers added revenue line support and support for future growth assumptions when using the income approach or market approach to valuation.

Evaluating marketing

An audit limited to the marketing and sales department may lead to erroneous conclusions. A single department does not operate in a vacuum; it functions in concert with all other parts of the business. To understand the real capabilities of a company and its marketing, one must consider available resources and the capabilities of the other departments to deliver on what marketing promises the customer. That is why The Marketing and Sales Due Diligence Guide  includes basic fact gathering in various areas of the company under scrutiny.

Business organization

Businesses organize in different ways to meet their specific needs. For instance, the marketing functions shown in this guide may get split up, with physical distribution being managed by the operations department. Some businesses separate marketing from sales, while others turn order entry and customer service over to production centers. Thus, organizational specifics related to these marketing functions may help or hinder the ultimate job of all businesses, to gain and retain profitable customers. Evaluation of each marketing function and how well it operates within the company (irrespective of organizational structure) may help highlight organizational strengths or weaknesses.

Asking questions

It is important to clearly understand how the business handles the various functions. Understanding comes from asking lots of right questions, listening and recording management’s answers, and gathering actual examples to back up those responses.

The questions included in this workbook, based on more than forty years of experience, provide the basis for a reasonably thorough evaluation of a business operation. Many key questions are highlighted in bold print.

As you proceed with the study, other questions will, no doubt, arise that apply to the specific business case under evaluation. This is to be expected. For example, a single question about the management of key accounts may lead to a series of questions about the findings and recommendations of a recent customer advisory council meeting.

Applicable to non-manufacturing businesses

The Marketing and Sales Due Diligence Guide includes questions about manufacturing, R&D, technology, and product development. If the company under evaluation is a wholesale firm or a service firm, such questions may not apply directly. The answers to some of those questions, however, may be important to know for the firm’s key supplier(s). Feel free to skip certain questions if they simply do not apply.

How to use this workbook

You can skip around depending on the person being interviewed. You can print the 95-page workbook and use it as your note-keeping tool. Use the blank backs of pages for detailed notes, diagrams, or responses to additional questions covered during interviews or data research.

Be sure to obtain samples of items discussed, lists, operating statements, budgets, aging summaries, sales collateral materials, advertisements, directories, competitor data, etc. to provide specific backup for statements made by management. It is not unusual for management to exaggerate the coverage, capabilities, or quality of past efforts.

The Marketing and Sales Due Diligence Guide will remind you of unasked questions, so managers being interviewed have less ability to ‘sin by omission’ and cover up weaknesses.

Conversely, it is very important to look diligently for areas where the company has developed competitive advantages. How well has the company’s management capitalized on its strengths and opportunities?

Also, note potential new areas for gaining more competitive leverage. The firm with unrecognized potential for competitive leverage may be more valuable under new ownership. If you are working in the company, potential leverage points should be discussed as part of future strategic plans.

Use of The Marketing and Sales Due Diligence Guide will avoid cases where management omits unpleasant topic areas. The analyst will stand a better chance of gaining a realistic picture of the company—the good, the bad, and the ugly!

After gathering sufficient facts, this workbook will help the analyst digest the many facts and assumptions, develop more informed conclusions, and offer better recommendations.