Marketing and Sales Due Diligence Guide

M&A Due Diligence Checklists
Sales, Marketing, and Operations
Copyright © 2014 Morgan Marketing Solutions, Inc.

Used with full permission of Morgan Marketing Solutions, Inc.
Table of Contents
INTRODUCTION........................................................................................................................ 4
I. MARKETING INFORMATION ........................................................................................... 7
1. PRODUCT DESIGN & DEVELOPMENT ...................................................................... 7
2. MARKET IDENTIFICATION AND DEVELOPMENT ............................................... 8
3. PRODUCT STRATEGY, POSITIONING AND SURROUNDS ................................. 10
4. PRODUCT PACKAGING ............................................................................................... 12
5. PRICING PRACTICES ................................................................................................... 13
6. ADVERTISING AND PUBLIC RELATIONS .............................................................. 14
7. SALES PROMOTION ..................................................................................................... 15
8. GENERATING & FOLLOWING UP SALES LEADS ................................................ 16
9. PHYSICAL DISTRIBUTION ......................................................................................... 17
10. OUTSIDE SALES EFFORT ........................................................................................... 19
11. INSIDE SALES EFFORT .............................................................................................. 24
12. DIRECT RESPONSE SALES EFFORT ...................................................................... 27
13. KEY ACCOUNT MANAGEMENT & SALES ......................................................... 328
14. CONTROLLING PRODUCT MIX .............................................................................. 30
15. INSTRUCTIONS FOR PRODUCT USE ...................................................................... 31
16. CUSTOMER SUPPORT SERVICES ........................................................................... 32
17. ORDER ENTRY ............................................................................................................. 33
18. FULFILLMENT, INSTALLATION & STARTUP..................................................... 34
19. WARRANTY - REPAIR & MAINTENANCE SERVICE ......................................... 35
20. COMPETITIVE INFORMATION ............................................................................... 36
21. MARKET RESEARCH ................................................................................................. 38
22. TRAINING ...................................................................................................................... 40

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23. FORECASTING ............................................................................................................. 41
24. PLANNING ..................................................................................................................... 43
25. MARKETING MANAGEMENT .................................................................................. 45
II. GENERAL INFORMATION ............................................................................................. 51
COMPANY MANAGEMENT’S ASSUMPTIONS:........................................................... 58
III. ORGANIZATION OF COMPANY ................................................................................. 60
IV. FINANCIAL INFORMATION ......................................................................................... 63
1. SUMMARY OF FINANCIAL INFORMATION .......................................................... 63
2. BALANCE SHEET SUMMARY .................................................................................... 64
3. MARGINAL INCOME ANALYSIS ............................................................................... 65
4. RATIO ANALYSES ......................................................................................................... 66
V. OPERATIONS INFORMATION ...................................................................................... 74
VI. TECHNOLOGY INFORMATION .................................................................................. 84
VII. STRATEGIC SUMMARY............................................................................................... 89
ABOUT THE AUTHOR ........................................................................................................... 96
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INTRODUCTION
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.
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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 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
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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.
In the end, it is the experience and capability of the analyst that determines the accuracy and
value of any company analysis.
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I. MARKETING INFORMATION
1. PRODUCT DESIGN & DEVELOPMENT
a) What is Marketing & Sales’ involvement in determining the design of company products?
b) How is marketing involved in the development of new products?
c) How often does marketing meet with technology and operations groups to review products
and progress on development of new products?
d) Do operations and technology personnel visit key customers?
If yes, how often? When were last visits?
e) Are marketing personnel fully aware of operating capabilities? Are they technically trained?
f) Are new products developed using pricing and profit guidelines, and a clear sense of
where the product can be sold?
Example:
g) How many new products have been introduced in the past
12 Months? 24 Months? 36 Months? 48 Months?
h) What percentage of sales is made up of products introduced in the above periods?
12 Months % 24 Months % 36 Months % 48 Months %
Comments:
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2. MARKET IDENTIFICATION AND DEVELOPMENT
a) What general types of markets are served?
Consumer Industrial Services
b) Within each type, what specific market segments are being served?
No. of Customers
Industrial Support Consumables
Industrial Process Consumables
Industrial Make/Buy Consumables
Industrial Capital Goods
Business Services
Consumer Services
Consumer Packaged Goods
Consumer Durable Goods
c) Has the company identified and separated each strategic Business Unit?
Identified? Developed Separate Strategies?
d) Are there identifiable customer groups for each type of product now being sold?
If Yes, are records kept by customer group?
Customer Size? Geographic Area? Other?
e) Is market research available on any of the customer groups to help identify needs and key
buying influences?
Source:
Source:
Source:
f) How are suspects and prospects uncovered?
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g) What efforts have been made to extend sales of other products to existing customers?
h) How many different customer groups are being served now?
What percentage of total sales to each group?
Customer Group: Percentage
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3. PRODUCT STRATEGY, POSITIONING AND SURROUNDS
a) How is the product line grouped?
b) Are products added, maintained, or dropped based on any overall business unit strategies?
Explain:
c) When looking at a product or product group, is a clear market position discussed and
established?
What role does branding play in market positioning?
Is the position consistent throughout the selling process?

Ads Promotion Sales Approach Follow-up
d) How has sales volume changed in the most profitable product categories in the past
2 to 3 years?
e) How has market share changed in the major market segments in the past 2 to 3
years?
f) How many accounts have been lost in the past year?
g) How many new accounts have been added in the past year? Do the above figures
track with past history?
h) How long does the company usually hold an average customer?
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i) What is done to review lost accounts, and follow—up?
j) What are the company’s major customer benefits?
k) Has any research been done to verify that customers actually perceive these benefits?
Example?
How important are these benefits to customers?
1) How does the company differentiate its product offerings from competitors?
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4. PRODUCT PACKAGING
How important does management feel packaging is for the company’s Products?
Are there differences between competitors in the types or variety of packages?

Significant?
Have customers requested different packages?
Any plans to respond?
When was the last review of product packaging?
What changes were made?
How are packaging decisions made on new products?
Does current packaging help sell the product?

How?
What restrictions are placed on packaging?
Does current packaging help or hinder automation?
Does current packaging help or hinder customers?
Are there opportunities to use packaging to help create

differences for the company’s products versus competitors?
Added Comments:
12
5. PRICING PRACTICES
Who establishes product pricing?
How are prices established?
How are “Special Price Requests” evaluated and approved?
Are “special prices” covered by written requests, good faith competitive information to
support the recommendation, and other necessary competitive information?
Are costs broken down to allow analysis of gross and net margins? Are profitability
thresholds used to avoid poor deals?
Do all “special prices” have expiration dates?
Does marketing review competitive offers and recommend changes in pricing strategy?
How often?
Does the Sales Manager review “special price requests?”
Is each product evaluated based on direct costs vs. average selling price and contribution
margin? How Often?
How much difference is there between highest price, median price and lowest price
realized on major products?
Example:
Is the spread in pricing justified? Consistent?
Other pricing comments:
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6. ADVERTISING AND PUBLIC RELATIONS
Does the company advertise on a regular basis?
Who is the company’s ad agency?
Location Account Executive
Amount spent on media space and ad production in past
year? $ Year before? $
Types of advertising used?
Are examples available of company ads and the competitive ads run about the same time?
Obtain and review.
Do company ads contain a unique selling proposition? Effective market positioning?
Are company ads considered appropriate and effective?

How Measured?
Does the company take advantage of public relations opportunities? How many news
releases in the past
Year? Prior year?
What subjects are covered in news releases?
Who prepares news releases? Who releases?
Who follows-up with media? How?
Who determines media for releases?
What products or services are advertised? Examples?
Other Comments
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7. SALES PROMOTION
Are sales promotions used on a regular basis?
Types used: #1
#2
#3
#4
#5
#6
Are any of the promotions continuous or very frequent?

Why?
Are the results of specific sales promos measured in terms of the added product sales
gained? How?
Are the sales gains long lasting or one time?
What products get the most promotion?
High profitability items? Examples:
Low profitability items? Examples:
All products at some time or other?
Who determines when and how to use sales promotions?
Who evaluates and approves the costs of sales promos?
Are sales promotion costs budgeted?
How well are these costs controlled vs. budget?
Comments:
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8. GENERATING & FOLLOWING UP SALES LEADS
Does the company have a system for following up on all sales leads from every source?
Examples:
What methods are used to generate leads?
#1
#2
#3
#4
#5
#6
Seminars? Technical Papers? Sales Literature? Social Media?
Workshops? Telemarketing? Trade Shows? #/yr
Direct Mail? Magazine Bingos/coupons? 800 No.
Free Gift? Sample of Product? Dealer Directory?
Are records kept of leads received? Conversion Rate? Source of lead? Casual vs
Prospect? Salesman F/U?
Who reviews results of sales lead generation and success ratios?

How often?
Do sales personnel consider lead generation by the company an important activity?

Why?
Are leads screened by phone or other means before committing a sales person’s time to follow
up? How?
How much is spent annually on sales lead generation?
Where specifically?
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9. PHYSICAL DISTRIBUTION
How important is delivery service to product sales?
What is the accepted industry delivery cycle time?
What is the average time for the company?
How are the company’s products delivered?
Does delivery service offer potential for a competitive advantage to the company?
How much?
How long has it been since transportation alternatives have been reviewed in detail?
What is the average cost per unit for freight out or other product delivery costs?
As a %of sales?
Does the company own/lease its own means of delivery?
What other types of delivery methods are used?

1 % of del. Cost %
2 % of del. Cost %
3 % of del. Cost %
Does the company keep records of backorders?
How?
Are records kept of delivery delays, or other customer service problems?

How?
Who actually manages the day-to-day distribution service for the company?
Does the company study its supply chain and logistics?
What types of problems are encountered?
What is the average inventory turn ratio?

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Who sets inventory levels? How?
Does marketing review and recommend inventory levels? Distribution methods?

Service records kept?
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10. OUTSIDE SALES EFFORT
Does the company have a sales force? How many?
What overall geographical area is covered?
What is the geography of an average territory?
How much does territory size vary?
To whom do the sales reps report?
How are sales reps compensated?
What is the average annual sales volume per sales rep?
What % of annual sales is spent on outside sales effort? (Include wages, fringes, T&E, sales
telephone, cars, etc. directly related to outside sales effort).
How long does it normally take to gain a new account?
How many calls/day does a sales rep usually make?
What other duties do the sales reps have?
a) Customer Services? Types?
b) Credit & Collection?
c) Customer Training?
d) Customer Problem Resolution?
e) End—user Calls?
f) Other Duties?
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Does the company have National Accounts? How many?
Who handles sales to National Accounts?
What % of total sales are to National Accounts?
Are there any International/Offshore Sales?
What % of total sales is to International?
How are Offshore Sales handled?
How are sales reps trained in selling skills?
How are sales reps trained in product knowledge, company policies, customer use of
products, etc.?
What is the sales rep turnover rate? % Last Year %
What process is used to hire sales reps?
By Whom?
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When are sales reps terminated?
What criteria are used?
Are probationary periods used? How Long?
Are all sales reps given annual performance appraisals? Are
appraisals in writing? Sales reps get a copy?
Is the Sales Manager rated on sales rep development?
How many sales reps are considered promotable?
Has the company ever conducted a sales rep attitude survey?
When was last survey conducted? What were results?
Have any sales reps been promoted in last 12 months? Who?
Does the company hold regular sales meetings?
Local? /yr. National /yr. Other /yr.
What is covered in the meetings?
Who attends sales meetings from HQ?
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Does each sales rep have an annual budget in product units and in sales revenue? Do
sales reps get monthly reports that show him/her where he/she stands by customer?
By Product?
How many significant new accounts were added in each of the past two years? Obtain a list
of new accounts, date first sold, and total sales dollars for each year.
Do sales reps have laptop computers and CRM (customer relationship management)
software? Software application(s) used?
Do they actually use the technology?
Do sales reps use electronic means to communicate with the company?

Company Intranet? Internet access?
How do sales reps handle:
Daily reports?
Expense reports?
Customer orders?
Internal E-mail?
External E-mail?
Sales reports from company?
Pricing requests?
Other uses?
22
Prepare lists of all outside sales personnel. Show all active personnel in these positions in
each of the past two years.
Include: name, date of hire, age, date of termination, normal retirement date if still employed,
and performance rating.
Outside Sales Personnel for the Year:

Name Hire Date Age Term. Date Retire Date Performance
Analysis and discussion of the lists will help answer questions related to sales personnel
turnover and issues regarding upcoming retirement of key representatives that might affect
future sales revenues.
Comments:
23
11. INSIDE SALES EFFORT
How are customer orders received?

Sales Reps?
Phone?
Mail?
E-mail?
FAX?
EDI?
Are there regular contacts between customers and the order-processing group in the
office? How often?
Does the company offer toll—free 800 service for customer orders?
Who handles the calls?
Do order processors solicit add—ons or make other suggestions to call-in customers?

Results?
Who manages the order processing function?
Reports to:
Is “Telemarketing” used to initiate customer contacts and to solicit orders?

How is effect measured?
Do inside sales personnel have regular contact with the outside sales group? How?
How are inside sales personnel hired?
By Whom?
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How are inside sales personnel trained?
What has been the turnover in inside personnel? %

Reasons?
How are inside sales personnel compensated?
How many inside sales people exist? Current? Prior Year?
Are inside & outside sales groups brought together for sales meetings during the year?
When?
Are inside sales personnel used for total sales job with any group of customers?
Which group(s)?
25
Prepare lists of all inside sales/customer service personnel. Include all active personnel in
these positions for each of the past two years.
Include: name, date of hire, age, date of termination, normal retirement date if still employed,
and performance rating.
Inside Sales/Customer Service Personnel for the Year:

Name Hire Date Age Term. Date Retire Date Performance
Analysis of this list will help answer questions related to inside sales turnover and potential
issues regarding retirement of customer service personnel that might affect future sales
revenues.
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12. DIRECT RESPONSE SALES EFFORT
Does the company use any direct response selling?
a) Direct Mail How?
b) Television/Radio? How?
c) Telephone? How?
d) Internet/Social Media? How?
Does the company sell any completely standard products to customers whose credit can be
pre-approved?
Do these situations provide an opportunity for direct response type selling?
Have any of the direct response techniques been tried in the industry? Results?
Are there any opportunities for use of a “standing order” system with regular buyers of repeat
products?
Do customers normally use purchase orders? Releases?
Are there any legal restrictions regarding direct response or automatic shipment techniques?
Does advertising and PR or social media provide any means of direct response with
prospects?
What?
What sales collateral materials are available?
Are sales collateral materials up-to-date?
Obtain samples of existing collateral materials.
27
13. KEY ACCOUNT MANAGEMENT & SALES
Does the company have any customers they consider “Key”?
Are these accounts handled differently? How?
What are these accounts called?
What criteria are used to decide Key Account Status?
Who makes the key account determination?
Who calls on the key accounts?
How Often? At what customer level?
Are the regular sales personnel involved in key accounts?
What % of total sales is to Key accounts?
Is there more than one category of Key account?

Number of categories:
How do they differ?
What added services are provided to Key accounts?
Are Key accounts used as sounding boards for new products?
New Services? New Policies? Product Modification?
Does the company hold “focus group” type meetings with top management of key accounts?
How often?
Who is responsible for coordinating company activities with Key accounts?
How often does top management review Key accounts?
How often is Key customer profitability reviewed? Added
Comments:
28
Prepare “Top Account” summaries for each of the last two years in order of rank by sales
dollars. See example below.
For each account, show account names, locations, sales reps responsible, total sales dollars for
the year and percentage of total sales each account represents. Ideally, each list should
account for more than 50% of total sales for the period.
Top Account Summary for the Year:

Account Name Location Sold Rep. $ Sales % of Total
Since Sales
TOTAL
Compare rankings and dropped versus added accounts between the two periods. What
conclusions can be reached? Reasons for lost accounts?
Do a handful of accounts comprise a significant percentage of the company’s total revenue?

Do the lists show positive sales results? New accounts gained?
To what degree does account concentration affect the vulnerability of the company to
sudden revenue loss?
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14. CONTROLLING PRODUCT MIX
How many products does the company sell?
How many products are standardized? %of sales = %
How many products are “Special?” % of sales = %
How many products have been added in the past year?
How many products have been deleted in the past year?
Do products vary based on geography? How?
Do products vary based on channel? How?
How does the breadth of product line compare with the major competitors?
Does the product mix offer a competitive advantage?
What Advantage?
Who reviews product lines? When?
What are the criteria for adding or dropping a product?
Are there any opportunities to eliminate “Specials” without losing profitability?
Does the company review inventory turnover by product?
How often? By whom?
What happens to slow moving or obsolete stock?
How are clearance discounts charged internally?
Do marketing and manufacturing/Technology discuss the product line on a regular basis?

When?
Can others better make any of the “Specials”?
Are premium prices charged for “Specials?”
Are “specials” more profitable? How Much?
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15. INSTRUCTIONS FOR PRODUCT USE
How important are instructions for the customer regarding product use? Do
company products have labels? Are instructions clear?
Are there any opportunities for improvement of instructions that would increase product sales
or customer satisfaction?
Are products supplied with operating manuals or lengthy instructions?
What has been customer reaction to the manuals?
Have any surveys been made with customers about instructions for product usage?
When? Available?
Do product instructions meet all legal requirements?

Are product instructions, etc. available on the company's website? Interactive chat?
Do instructions suggest any areas for product improvement?
What needs to be done?
Are any new products, package sizes or types, etc. suggested by customer use of instructions?
Are there other applications for the product among current customers or perhaps new
customer groups?
Would other applications require product or instructional modifications? What kind?
Does marketing review product applications engineering, label instructions, or

operating manuals? When?
Who actually writes product instructions?
Are products easy or hard to use?
Does product use require a lot of experience or training?
Does the company provide the training required? How is
customer training handled?
What are the results of training?
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16. CUSTOMER SUPPORT SERVICES
How does the company handle the following support services?
a)Customer Claims/Product Warranty?
b)Requests for Literature?
c)Customer Questions?
d)Parts & Service?
e)Billing Errors?
f)Return Requests?
g)Order Shipment Inquiries?
h)Lost orders?
i)Backorders/Delays
j)Order Placement?
k)Prospect Inquiries from Ads, etc.
Are any support services available on-line through the company's website?
Who does the customer service function report to within the company organization?
Are all customer service activities grouped to avoid customer communications confusion?
How do customers normally contact the company for their service and support needs?
Are there opportunities to improve customer service and create a competitive advantage or
increase sales and profitability?
Does management review customer satisfaction with the company’s support functions?
When?
What did the last review indicate?
Added Comments:
32
17. ORDER ENTRY
How are customer orders accepted and entered?
Is order entry centralized? Where?
Who manages the order entry function?
Is order entry computerized? How long?
Who formally accepts purchase orders?
How is credit approval obtained?
Time to obtain credit approval?
Are returns reviewed to determine accuracy of order entry?
How are orders communicated to manufacturing/operations?
Is the system integrated to provide reports on order activity to each department?

Reports Available:
Marketing & Sales
Operations
Finance
Credit
Has customer satisfaction with order entry procedures been surveyed?

When last?
What were the results?
What is spent on order entry? % of Sales
Are there opportunities to improve results by changing the order entry function?
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18. FULFILLMENT, INSTALLATION & STARTUP
How complicated is the process of moving from product order to the satisfactory use by a
customer?
Describe:
What is the normal delay between customer order and delivery?
How does delivery compare with competitors?
Who installs and starts-up the product?
How complicated is installation?
Does delivery and installation require coordination?
How handled?
How many claims for goods damaged in transit?
How many product returns due to installation or startup problems?
What is the normal time for customer acceptance after delivery of engineered products?
Are there opportunities for improvement in the fulfillment functions? What needs to be done?
Have any surveys been done to determine customer satisfaction with fulfillment functions?
When?
With what results?
Added Comments:
34
19. WARRANTY - REPAIR & MAINTENANCE SERVICE
Do company products carry a warranty? Describe it:
Does the warranty require the company to repair and maintain the products? What
is spent on warranty services? % of Sales.
How much time elapses between receipt of a claim and the normal repair service?
Where is service provided?
How many warranty claims are processed per year?
Is the trend to more or less claims?
Is customer downtime a consideration for the buyer?
Has the company surveyed customers about satisfaction with warranty service?
When?
Results:
Would improvements in warranty service provide any competitive advantages?

What are they?
Do competitors offer the same types and quality of warranty and service?
Who does warranty and service function report to in the company?
What role does marketing play in evaluation of services to customers?
Added Comments:
35
20. COMPETITIVE INFORMATION
Does the company have an organized method for gathering competitive information?
Describe:
How is the information analyzed and communicated?
How often is competitive info, analyzed? When Last?
Who is involved in competitive analysis?
Are competitive samples analyzed on a regular basis?
What results when compared to company products?
Are all other aspects of competitive offerings also analyzed?
NOTE: A review of all the functions under marketing should be used as a guide for
competitive reviews.
Has the company done any surveys of customer opinion regarding relative competitor
strengths and weaknesses?
When? Results:
Is the sales force actively engaged in gathering data?
Does the sales force get analyses of results?
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Does the company maintain archives of competitive data?
Are sources and dates shown to avoid legal questions?
Are substitute product suppliers and foreign suppliers included as competitors or potential
competitors?
Are these now serious competitors? Future?
Added Comments:
37
21. MARKET RESEARCH
Does the company conduct research to define and quantify its market(s)?
How is the research done?
What is the most recent data available?
How frequently is the research updated?
Are there means to verify the data? How?
Does the company conduct research to determine the wants and needs of customers and
prospects?
How is the research done?
Is the research done by market segment? Product?
What is the most recent data available?
How frequently is the research updated?
How is research verified?
Has the company ever used focus groups? When?

Findings:
Are company records actively used to gather data on customer satisfaction, complaint
areas, actual service levels, etc.?
38
How are records used?
Does the company use customer surveys to gain opinions on its offering relative to
competitors? When?
Results:
Are other departments involved in the process of gathering and analyzing competitive data?
Which?
Added Comments:
39
22. TRAINING
Does the company provide training in the application/use of its products?

Where?
To Whom? Outside Sales?

Inside Sales? Order
Entry? Service
Personnel? Other
In—House?
Wholesalers?
Retailers?
Distributors?
What types of training are provided?
Do company sales personnel receive formal selling skills training? Specific Type:
Do company sales personnel receive formal territory management training?

Type:
Is this training available to distributors or dealers?
Are sales personnel technically trained in the products?
Do sales personnel train others in the channel of distribution? Are they trained
to train?
How much is spent on training? % of Sales
Do marketing personnel receive training in other aspects of marketing activities? How?
Does the company record individual training as it is received?
Is training used on a regular basis to provide development of promotable personnel?

Examples:
40
23. FORECASTING
Does the company use a formal budgeting system?

Describe the system:
Does marketing provide annual sales forecasts?

By Customer? By Product Type? By Product?
How are the forecasts built?
Who reviews and approves the forecasts?
Are individual forecasts reviewed?
Is the composite forecast reviewed and modified? By whom?
Are allowances made for normal customer attrition? How?
Are annual forecasts reviewed during the year? When?
Are sales forecasts used to budget manufacturing, overhead costs, etc. How?
How accurate have prior forecasts been?
Are sales personnel involved?
Are Key accounts involved in estimating their needs?

41
Are others in marketing involved in gauging effects of changes in the marketing mix?
Do forecasts include estimates of total market and budgeted changes in market share?
How?
Have there been any “surprises” in recent years due to sales forecasts that were too far
off reality?
What happened as a result?
Added Comments:
42
24. PLANNING
Does the company have a multi-year marketing plan?
Is the plan in writing? Last Reviewed?
Is the plan based on an overall corporate strategy and business plan? Does
the company have a formal, written mission statement?
Who is responsible for marketing planning?
How is the marketing plan developed?
Does the company have a short-range marketing plan for the current period?
Is the plan in writing? Last Reviewed?
Does the short-range plan fit the objectives of the long-range plan? Differences:
How effective have the plans been in the past in achieving the company’s overall
objectives?
Do company plans include comparisons to the markets and to competitors?

Market Share Changes?
Does the company’s current marketing department have adequate knowledge and
resources to properly perform the planning function? Describe needs:
43
Are industry trends available from reliable sources to describe the markets and
determine share?
Sources:
Which sources are most reliable? Which sources are actually used?
Are any key competitors publicly owned? Does the company acquire and research
competitive 10Q and 10K filings to gain specific competitive information?
Added Comments:
44
25. MARKETING MANAGEMENT
At what stage of development is the company?

Start-up Growth Mature Declining
How complex is the product line?
How complex is the support system and marketing mix?
How are the marketing functions now managed?
How is the sales function managed?
Have the marketing functions been managed to help the company achieve its overall
objectives for growth, profitability, survival, etc.? Explain.
How does management of marketing compare in importance with the other major
functions of the company?
Do improvements in marketing management offer opportunity for competitive advantage?

How?
How does the company’s marketing management structure compare with major
competitors?
45
Do all of the marketing and sales functions report to a single marketing executive?
Which functions report elsewhere?
What role does marketing play in overall company planning and establishment of goals?
Added Comments:
46
MANAGEMENT BACKGROUND DATA SHEET
Position: Marketing & Sales Executive/CME
Name:
Age: Years With Company: Prior Experience Years
Educational Background:
Prior Positions with Company:

1.
2.
3.
4.
Prior Positions with Others:
1. with
2. with
3. with
4. with
5. with
Other Information:
Personal Philosophy Related to Business, Customers, etc.
Personal Assumptions About the Future of the Business:
47
Summarize the leadership “style” and personality of this individual.
Autocratic? Participative? Optimistic? Pessimistic? Flexible?
Influential? Approachable? Friendly? Assertive? Aggressive? Respected? Passionate? Strong?
Weak? Positive? Negative? Egotistic? Hard-nosed? Visionary? Energetic? Workaholic?
How do others describe this individual?
Does the individual exert influence and leadership in one specific area or throughout the
company?
How well has the individual gained the trust of others in the organization?
How does the individual interact with other team members?
How does the individual interact with customers and prospects?
Does the individual hold leadership positions outside the

company? (Industry? civic? service organizations? Charities?)
48
Position: Sales Manager
Name:

1.
2.
3.
4.
1. with
2. with
3. with
4. with
5. with
Other Information:
49
company?
Does the individual hold leadership positions outside the company? (Industry? civic? service
organizations? charities?)
50
II. GENERAL INFORMATION
Client’s Legal Name:
Address:
City: State: Zip:
Phone: FAX:
Web Site:
In Business: years months
Form: Inc. LLC LLP Partnership Proprietorship
Incorporated in State of: Date: S Corp.? C Corp.?
Partnership Agreement Date:

Buy/Sell Agreement? Key Life on? All Parties?
Amount(s) of Insurance:
Number of Shareholders/Partners: Active: Silent:
Major Bank Used: Location:

Contact: Phone:
Describe current banking relations:
Who handles banking relations for the company?
Are current credit facilities adequate? Discuss specifics?
Describe any financing concerns:
51
C.P.A. Firm Location:
Contact: Phone: How long?
Services provided by CPA firm:
Law Firm: Location:
Lead attorney: Phone: How long?
Services provided by law firm:
Description SIC Code

S.I.C. Codes Served:
Markets Served: Industrial Support Consumables

Industrial Process Consumables
Industrial Make/Buy Consumables
Industrial Capital Goods
Business Services
Consumer Services
Consumer Packaged Goods
Consumer Durable Goods
Other Operating Locations Type:
2.
3.
4.
5.
52
In general, what is the overall condition of the company relative to its industry and
major competitors? Explain.
What is the company’s position in its industry? What is it uniquely known for?
Can the company cite a “Unique Selling Proposition?” What is it?
How prepared is the company for future growth?
What resources are now available?
What new resources are needed?
53
OWNER’S VISION
MISSION OF THE COMPANY - CURRENT STATEMENT
Major Goals & Objectives of Company — Current Statement
1.
2.
3.
4.
5.
6.
7.
8.
54
How often does top management formally meet to review results of current operations? Do
the functional managers prepare written status reports of projects and accomplishments?
Other methods of management communications used? What?
Does the company have a written business plan? Detailed
Annual Budget? Long-range Plan?
Monthly Operating Reports?
Variance Reports?
Does the company hold Patents? Registered TM’s? Describe.
Copyrights? Other Intellectual Property?
Overall importance of intellectual property to business?
Company’s ranking in major segments served vs. competitors? Segment
Rank
Segment Rank
Segment Rank
Segment Rank
Segment Rank
55
Who are the company’s major competitors?
a) Segment
b) Segment
c) Segment
d) Segment
e) Segment
f) Segment
Does the company have contingency plans that help reduce risk of unexpected
difficulties?
Explain:
What degree of risk(s) does management recognize?
Does the company have Business Interruption Insurance?
Amount?
Name of insurance company:
Policy # Date:
56
BASIC STRENGTHS OF COMPANY:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
BASIC WEAKNESSES OF COMPANY:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Additional Comments:
57
COMPANY MANAGEMENT’S ASSUMPTIONS:
A. About the External Environment:
B. About Their Markets:
C. About Their Customers:
D. About Their Employees:
E. About Their Products:
F. About Their Competitors:
58
G. About Plant & Equipment:
H. About Product Quality:
I. About Their Industry:
J. About Their Product Lines:
K. About Their Marketing:
L. About Communications:
M. About Profitability:
N. About Customer Service:
0. Other Assumptions:
59
III. ORGANIZATION OF COMPANY
Title Name Years Service

Chief Executive/CEO
Marketing Officer/CME
Sales Manager
Financial Officer/CFO
Operations Officer/COO
Technology Officer/CTO
Other:
Other:
Organization is Centralized? Decentralized? Both?

Explain:
How long has this organization structure been in place?
When & what was the last change made?
Total Number of Employees Currently:
Total Number of Employees a Year Ago:
Annual $ Sales/Employee Now: $ Year Ago: $
Who in the Organization handles organizational matters?
Written Organization Chart(s) available? Where? Copy Available?
60
Position: President/CEO/Managing Partner
Name:

1.
2.
3.
4.
1. with
2. with
3. with
4. with
5. with
Other Information:
61
company?
Does the individual hold leadership positions outside the company? (Industry? civic? service
organizations? Charities?)
62
IV. FINANCIAL INFORMATION
1. SUMMARY OF FINANCIAL INFORMATION
Item Current Period Prior Period
Gross Sales
Less: Returns & Allow.
NET SALES
Cost of Materials Sold
Other Variable Costs
TOTAL VARIABLE COSTS

GROSS PROFIT
Marketing & Sales O/H

General & Admin. O/H
Other Income/Expense
Earnings Before Interest, Taxes &

Depreciation (EBITDA)
Depreciation & Amortization
Earnings Before Interest & Taxes
(EBIT)
Interest Expense
Income Taxes
NET INCOME
Added Comments:
63
2. BALANCE SHEET SUMMARY
Item Current Period Prior Period
Cash & Equivalents

Accts. Receivable-net
Inventories
Other Current Assets
TOTAL CURRENT ASSETS
Fixed Assets-Buildings &
Furnishings
Fixed Assets-Vehicle
TOTAL FIXED ASSETS
TOTAL ASSETS
Accounts Payable
Current Portion of L.T. Debt
Other Current Liab.
TOTAL CURRENT LIAB.
Future Portion of L.T. Debt
Other Long Term Liab.
TOTAL LONG TERM LIAB.
TOTAL LIABILITIES
Paid In Capital
Retained Earnings-Prior
Periods
Retained Earnings-Current
Period
Other Equity
TOTAL EQUITY
(NET WORTH)
TOTAL LIAB.& EQUITY
Added Comments:
64
3. MARGINAL INCOME ANALYSIS
Item Current Period Budget Prior Period

NET SALES REVENUE
Materials Purchased
+/- Inventory Change
NET MATERIALS
Freight In
Direct Labor
Mfg. O/H–Variable
Freight Out
Sales Commissions
Other Variable
TOTAL VARIABLE
COST
MARGINAL INCOME $
(Net Sales-Total Variable
Cost
MARGINAL INCOME %
M.I.$/Net Sales $)
Mfg. O/H-Fixed
Technical
Sales-Fixed
Marketing Admin.
General Admin.
Interest +/-
TOTAL FIXED COST
BREAK EVEN POINT
(Fixed/M.I.%)
Sales Above(Below) B.E.
(Net Sales-B.E.)
OPERATING INCOME $
(Sales +/- B.E. x M.I.%)
OPERATING INCOME %
(Oper. Income/Net Sales)
65
4. RATIO ANALYSES
Period of to
1. MEASURES OF PROFITABILITY:
A. Margin
P) Net Income $
= %
Net Sales $
S) Gross Profit $
= %
Net Sales $
B. Turnover
P) Average Days Sales Outstanding = days
P) Days sales in inventory = days
P) Net Sales $
= %
Owner’s Equity $
P) Net Sales $
= %
Total Assets $
S) Net Sales $
= %
Net Fixed Assets $
S) Net Sales $
= %
Net Work. Cap. $
66
C. Balance
P) Net Fixed Assets $
= %
Equity + LT Liab. $
P) Current + Fixed Assets $
= %
Total Assets $
S) Curr. Liab. $
= %
Total Liab. $
S) Total Liab. $
= %
Owner Equity $
S) Acct. Rec. $
= %
Current Assets $
S) Inventory $
= %
Current Assets $
NOTE: BALANCE RATIOS ARE ALSO USED TO DETERMINE

STABILITY WHEN USED WITH THE FOLLOWING ADDITIONAL
RATIOS....
67
2. MEASURES OF STABILITY:
A. Liquidity
Curr. Assets $
= %
Curr. Liab. $
(Current Ratio)
Curr. Assets less: Inventory $

= %
Curr. Liab. $
(Quick Ratio/Acid Test)
B. Solvency
E.B.I.T. $
= %
Interest $
Net Income plus Deprec. $
= %
Current Part of LT Debt $
68
Financial Management
How does the company manage the finance and accounting functions?
Does the CEO have good knowledge of accounting and finance? If not, how does the
company compensate?
Does the company have audited, reviewed, or compiled operating statements? Explain.
What is the budgeting process? Explain in detail.
Is long-range forecasting done? Explain how. Who is involved?
Are monthly operating statements prepared?
How long after month-end are statements available to management? Examine actual dates
for the past six months.
69
Does the company prepare active cash flow forecasts? Who gets the forecasts? How
used?
How often are cash flow estimates prepared? Who prepares them? Examples.
What is the company’s D&B rating?
Obtain aging reports for current receivables and payables. What are the ratios? Are they
satisfactory?
Are there disputed accounts? Accounts in litigation?

Obtain names and amounts.
Does the company prepare an annual capital expenditure plan? Obtain most recent
example:
How does the company manage fixed overhead costs such as insurance, supplies, rent,
telephone, administrative personnel costs, etc.?
How often does the company review significant overhead costs and obtain new quotes?
Obtain examples.
How well are fixed assets maintained? Who makes repair versus replace decisions?
70
Does the company lease capital equipment?
Who makes lease versus purchase decisions? How analyzed?
Do other functional managers respond well to financial reports? Do they

understand the reports that cover their areas of responsibility?
Who manages the information technology requirements of the company?
How up-to-date are information systems? Compared to competitors? Specifics.
Are current systems adequate for the short-term?
What will be required to accomplish long-term objectives?

Specifically:
New investments in IT estimated at:
71
Position: Financial Officer/CFO
Name:

1.
2.
3.
4.
1. with
2. with
3. with
4. with
5. with
Other Information:
72
company?
Does the individual hold leadership positions outside the company? (industry? civic? service
73
V. OPERATIONS INFORMATION
What functional aspects of the company are included in the Operations Department?
Manufacturing is Continuous? Batch? Both? None?
What raw materials go into production of the company’s

products?
What semi—finished materials are used?
How long is the normal manufacturing cycle?
What are the major steps in the manufacturing process?
74
How is the quality of the company’s products relative to other competitors? Examples of
specific differences?
Are there opportunities for competitive advantage that are already built into the company’s
products?
What are they?
Can significant advantages be built into the products with current operating assets? How?
Who is responsible for product quality control and assurance at the plant level?
To whom does plant level QC report?
Does the company use statistical process control?
Is the company ISO 900x qualified? To what level?

Describe:
What are the average amounts of product returns & allowances due to manufacturing
defects?
This Year $ Average/Month?

Last Year $ Average/Month?
75
Does the company maintain records of the causes of returns and complaints related to
product problems?
What do the records show?
What is the usual level of backorders (late shipments)?
What are the primary reasons for late shipments?
How could late shipments be minimized or eliminated?
How long after a customer places an order is manufacturing or operations aware of the details
of the order?
How are customer emergency orders handled?
How is marketing alerted to production or operational problems, that will affect customer
service?
How soon is marketing alerted?
Does the company employ preventive maintenance on equipment? Explain.
76
How frequent are operational breakdowns encountered?
When was the last incident?
What caused the last breakdown?
What usually causes breakdowns?
At what percentage level of capacity are the operations now performing? %.
What capacity level is normal? %.
How many shifts are now operating? per
How many shifts are considered 100% utilization? per
How many operations employees are there?
What level of turnover is being experienced?
Is the workforce unionized? If so which Union(s)?
Are competitors unionized? Union(s):
From a manufacturing viewpoint, are there realistic opportunities for elimination of some
products to reduce overall cost of operations?
Examples:
What percentage of sales is absorbed by purchase of direct materials and supplies
77
related to the products sold? %.
Who manages the company’s purchasing function?
That person reports to?
How often does purchasing formally review prices and overall performance of key
suppliers?
Examples:
Do any major purchased materials lend themselves to possible consignment from a key
supplier?
How are the inventory control and purchasing functions coordinated?
Do the company’s top management meet with supplier top management?

How often?
Does purchasing philosophy favor multiple suppliers for safety or consolidation of suppliers
to gain more favorable terms?
Does the company have any “just in time” arrangements with key suppliers?
Explain:
What is the accepted level of product loss due to material waste, rejects, etc.?
Are there any ways to reduce this level of waste using current assets? How?
78
Are there ways to reduce waste with new assets?
How?
Are operations people involved in complaint resolution?

How?
How much do the company’s operating people know about the competitor’s operations and
cost structure?
How are new operations personnel hired?
What kinds of training are given to operational people?
Are operations people aware of how customers use the products they produce? How so?
What is the general condition of the operating facilities?
Are operational capabilities appropriate for current needs?

Short-term Needs? Long-term Needs?
What are the most urgent and important operating needs?
If those needs are met, how will they affect the company’s competitive position?
79
Are there some additional products that could be made with current operating assets to open
up new market opportunities with existing customers? What?
What about additional products that might open up new customers in a different area?
Have these opportunities been discussed with other company management? If not, Why
not?
Management’s reaction:
How close are manufacturing tolerances that operations must meet? Are these
tolerances realistic?
Are tolerances a problem?
Has this been discussed with other management? Response?
How about product packaging?
Are there any EEOC, EPA, OSHA, or other governmental problems or restrictions that affect
operations?
What?
Does the company have any government contracts?
How do operations personnel get recognized for good work?
How is general morale in operations?
Has any effort been made to verify employee satisfaction?

What? When Last?
Added Comments:
80
PRODUCTION FLOW CHART
81
Position: Operations Officer/COO
Name:

1.
2.
3.
4.
1. with
2. with
3. with
4. with
5. with
Other Information:
82
company?
Does the individual hold leadership positions outside the

company? (industry? civic? service organizations? Charities?)
83
VI. TECHNOLOGY INFORMATION
What is the basic technology utilized by the company?
Do patents protect the company’s technology?
Patent No. Description of Patent Expires
How important are these patents from a competitive standpoint?
Who is responsible for keeping the company current in the technology area?
What is spent on research & development activities?
This year? Last Year?
Who normally generates new product ideas?
Where else do ideas come from?
Examples of new ideas over past 2 years:
What is the most important current project?
How strong technically is the company compared to the major competitors?
Are there opportunities for competitive advantage in the technical area? Are they being
used?
Suggestions:
84
What other duties do technical personnel handle?
Do technical people help analyze materials, products and new product ideas from a cost
standpoint? How?
Are there ways to reduce costs on existing products with technical changes that would not
significantly alter product performance? How?
Have the ideas for technical change been discussed with other management?
Reaction:
Are technical personnel aware of how customers use the products? How well aware?
Do technical personnel assist marketing with closing of major Key account sales?
Examples:
Would technical sales assistance be a good idea?
Do technical people get involved in solving customer product problems?

How?
When was the last technical review of the major products in the line?
Were changes made?
What changes?
How do the company’s products compare technically with major competitors?
How are manufacturing specifications developed?
How often are specs reviewed? Last Review?
85
Do company ads and literature show all product features and benefits?
What’s omitted?
Added Comments:
86
Position: Technology Officer/CTO
Name:

1.
2.
3.
4.
1. with
2. with
3. with
4. with
5. with
Other Information:
87
company?
Does the individual hold leadership positions outside the company? (industry? civic? service
88
VII. STRATEGIC SUMMARY
A. What is the current overall strategy of the company?
B. Is this strategy implicit or explicit?
C. What are management’s primary assumptions
1. About the company’s relative position?
2. About the company’s strengths & weaknesses when compared to competitors?
3. About major competitors?
89
4. About the company’s major industry groups?
5. About potential for change to occur in any of the areas affecting the company’s
main business?
6. About how best to manage a business/other biases?
7. About handling customers and customer satisfaction?
8. About employees?
90
D. What are the key factors for competitive success?
1.
2.
3.
4.
5.
6.
E. What are the greatest industry opportunities?

1.
2.
3.
4.
5.
6.
F. What are the greatest industry threats?

1.
2.
3.
4.
5.
G. What are the greatest threats to the company?

1.
2.
3.
4.
5.
91
H. What overall future climate is indicated by analyses of major competitors?
I. What changes in government regulations or other socio-political factors are likely to

have a major effect?
J. How do the company’s strengths & weaknesses compare to those of the major
competitors and potential competitors?
K. What are the greatest sources or potential sources of competitive advantage for the
company in the future?
1. S/P
2. S/P
3. S/P
4. S/P
5. S/P
6. S/P
Note: S = Source of advantage; P = Potential source of advantage.
L. How well can the company sustain the leverage of these sources of advantage?
92
M. How does the current strategy compare with the analysis of current and future
opportunities & threats?
N. Are the company’s goals mutually achievable?

Explain:
O. Are operating policies consistent with goals?
P. Do company policies reinforce or fight each other?
Q. Do company goals exploit the best opportunities?
R. Do company goals deal with major threats?
S. Can the market environment absorb the impact of the achievement of the company’s goals?
T. Do goals match the company’s resources?
1.Financial?
2. Personnel?
3.Plant Capacity?
4.Ability to change?
93
U. Are the company’s goals understood by those who must implement them?
V. Do goals of the company, and the employee culture match?
W. Is there sufficient leadership and managerial capability available to achieve the

goals? Explain:
X. Given the above analyses, what are the feasible strategic alternatives?
1.
2.
3.
4.
5.
6.
Y. Is the current strategy one of the above?
Z. Which alternative best matches the company’s situation and resources to the
opportunities and threats identified in the analysis?
What basic changes will be required to adopt the best strategy alternative?
94
Contingencies to consider:
1.
2.
3.
4.
5.
6.
7.
8.
Note:
The additional information gathered during the analysis process, along with this strategic
summary, may lead to new insights and a desire to modify the company’s focus. Earlier long-
term forecasts may also require review and adjustment.
Should the company’s mission and focus be modified?

How?
Are long-term forecasts still valid, given the current situation and resources?
Changes needed?
General Comments:
95
ABOUT THE AUTHOR
Richard P. Morgan CMC has more than 50 years of multi-functional management

experience. He is also a Certified Management Consultant. Dick founded his consulting
practice in early 1989. Dick helps leaders become better marketers using a holistic business
approach. He works primarily with manufacturers, distributors, commercial services, and
financial service firms.
Dick has a long-standing affiliation agreement with a Dallas merchant bank. He assists the
merchant bank and its selected clients with evaluations of marketing, business plans, and
feasibility studies.
As Senior Vice President Marketing, he led the revenue growth of Long Mile Rubber Company
from$17 million to more than $100 million—against stiff competition—during fifteen years
with that firm. Dick was actively involved in strategic planning and general management.
Preparation of business plans, acquisition studies, and two LBO opportunities added depth.
Earlier, Dick was responsible for all commercial marketing efforts in New England for Mobil
Oil Corporation. In prior positions, he directed Mobil’s U.S. general aviation marketing
program, and was a successful marketing representative in California.
Dick graduated with honors in business administration from California State Polytechnic
University and he also holds an Associate degree majoring in engineering from Fullerton
College. His marketing and business management articles appear nationally in Modern Tire
Dealer magazine and other publications.
Dick Morgan is an active member of the Institute of Management Consultants USA.

He has served that professional organization as Vice Chairman, member of the National
Board of Directors, Dallas/Fort Worth Chapter President, and currently serves as Chairman
of IMC USA’s Professional Resource Evaluation Committee.
**************
Richard P. Morgan CMC
Morgan Marketing Solutions, Inc.
Two Galleria Tower, Suite 1000
13455 Noel Rd, Dallas, TX 75240-6620
972.931.7993
e-mail rpmorgan@morganmarketingsolutions.com
96

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M&A Due Diligence Checklists

Sales, Marketing, and Operations

Copyright © 2014 Morgan Marketing Solutions, Inc.

I. MARKETING INFORMATION ........................................................................................... 7

1. PRODUCT DESIGN & DEVELOPMENT ...................................................................... 7

2. MARKET IDENTIFICATION AND DEVELOPMENT ............................................... 8

3. PRODUCT STRATEGY, POSITIONING AND SURROUNDS ................................. 10

4. PRODUCT PACKAGING ............................................................................................... 12

5. PRICING PRACTICES ................................................................................................... 13

6. ADVERTISING AND PUBLIC RELATIONS .............................................................. 14

7. SALES PROMOTION ..................................................................................................... 15

8. GENERATING & FOLLOWING UP SALES LEADS ................................................ 16

9. PHYSICAL DISTRIBUTION ......................................................................................... 17

10. OUTSIDE SALES EFFORT ........................................................................................... 19

11. INSIDE SALES EFFORT .............................................................................................. 24

12. DIRECT RESPONSE SALES EFFORT ...................................................................... 27

13. KEY ACCOUNT MANAGEMENT & SALES ......................................................... 328

14. CONTROLLING PRODUCT MIX .............................................................................. 30

15. INSTRUCTIONS FOR PRODUCT USE ...................................................................... 31

16. CUSTOMER SUPPORT SERVICES ........................................................................... 32

17. ORDER ENTRY ............................................................................................................. 33

18. FULFILLMENT, INSTALLATION & STARTUP..................................................... 34

19. WARRANTY - REPAIR & MAINTENANCE SERVICE ......................................... 35

20. COMPETITIVE INFORMATION ............................................................................... 36

21. MARKET RESEARCH ................................................................................................. 38

22. TRAINING ...................................................................................................................... 40

24. PLANNING ..................................................................................................................... 43

25. MARKETING MANAGEMENT .................................................................................. 45

II. GENERAL INFORMATION ............................................................................................. 51

COMPANY MANAGEMENT’S ASSUMPTIONS:........................................................... 58

III. ORGANIZATION OF COMPANY ................................................................................. 60

IV. FINANCIAL INFORMATION ......................................................................................... 63

1. SUMMARY OF FINANCIAL INFORMATION .......................................................... 63

2. BALANCE SHEET SUMMARY .................................................................................... 64

3. MARGINAL INCOME ANALYSIS ............................................................................... 65

4. RATIO ANALYSES ......................................................................................................... 66

V. OPERATIONS INFORMATION ...................................................................................... 74

VI. TECHNOLOGY INFORMATION .................................................................................. 84

VII. STRATEGIC SUMMARY............................................................................................... 89

ABOUT THE AUTHOR ........................................................................................................... 96

Business analyses versus business valuation

Applicable to non-manufacturing businesses

How to use this workbook

b) How is marketing involved in the development of new products?

d) Do operations and technology personnel visit key customers?

If yes, how often? When were last visits?

g) How many new products have been introduced in the past

12 Months? 24 Months? 36 Months? 48 Months?

h) What percentage of sales is made up of products introduced in the above periods?

12 Months % 24 Months % 36 Months % 48 Months %

f) How are suspects and prospects uncovered?

h) How many different customer groups are being served now?

What percentage of total sales to each group?

Customer Group: Percentage

a) How is the product line grouped?

What role does branding play in market positioning?

Is the position consistent throughout the selling process?

f) How many accounts have been lost in the past year?