The situation
A CA firm in Ahmedabad is advising the promoters of a speciality chemicals company in Ankleshwar on the sale of a significant stake to a private equity fund based in Bengaluru. The fund has signed a term sheet and sent its due diligence request list as a spreadsheet. It has more than three hundred lines across eight tabs. Some requests are clear ("audited financial statements for the last three years"). Others are vague ("all material contracts"). Several seem to ask for the same thing twice.
The promoters' first reaction is alarm. The CA's first job is to explain that this list is normal, that most of it is routine, and that the real work is in organising the answers.
Why the list is so long
A buyer is about to pay for a business it has seen only from the outside. The request list is how it checks that what it has been told is true and finds what it has not been told. Each line maps to a risk the buyer's lawyers, accountants or operating partners want to rule out. Lists are usually built from a standard template and then adjusted for the sector, which is why some lines will not apply to you.
Knowing what each section is testing helps you answer it properly, with a short note beside each file.
The usual sections
Corporate and secretarial
Certificate of incorporation, memorandum and articles, shareholding pattern and its history, statutory registers, board and shareholder minutes, and filings with the Registrar of Companies. The buyer is checking that the company exists as described, that the people selling own what they claim to own, and that past share issues and transfers followed the Companies Act and the articles.
Financial
Audited accounts, monthly management accounts, trial balances, ageing of receivables and payables, inventory reports, fixed asset registers, details of borrowings and guarantees, and related party transactions. The buyer's accountants are testing the quality of earnings: whether the profit you report is repeatable, and whether working capital and debt are what they appear to be.
Tax
Income tax returns and assessment orders, GST returns and reconciliations, TDS filings, transfer pricing documentation if you have related party dealings across borders, and a list of open notices, disputes and appeals. The question here is what tax exposure the buyer could inherit.
Commercial and contracts
Customer and supplier agreements, distribution and agency agreements, top customers by revenue, pricing terms, and any exclusivity or non compete clauses. The buyer wants to know how concentrated your revenue is and whether key contracts survive a change of ownership.
Legal and litigation
Pending and threatened litigation, regulatory notices, consumer complaints, and legal opinions you have taken. Expect a request for a summary table: party, forum, amount, status and your lawyer's view of the likely outcome.
Property, licences and environment
Title documents or leases for every site, factory licences, pollution control consents to establish and operate, hazardous waste authorisations, and fire safety approvals. For a chemicals business this section gets close attention, because a lapsed consent can stop production.
People
Organisation chart, employee headcount by function, employment terms for senior staff, provident fund and ESI compliance, contract labour arrangements, and any incentive or stock option plans. The buyer is checking labour law compliance and whether the people who run the business will stay.
Technology and data
Software licences, ERP and IT systems, cyber incidents, and how you handle personal data. Under India's Digital Personal Data Protection Act, 2023, the buyer will want to know what personal data you hold, why, and how it is protected. This section is often short for an industrial company, but it is growing.
How to answer without drowning
Triage before you upload anything
Go through the list with your advisers and mark each line: available now, available with work, not applicable, or needs a conversation. "Not applicable" answers need a one line reason. Lines that need a conversation are usually the vague ones; agree what the buyer actually needs before you spend a week on it.
Give every request an owner and a date
The finance head answers financial lines, the company secretary takes corporate lines, the plant head takes licences. Each owner should know which lines are theirs and when they are due. Without this, requests fall between people and the buyer's follow up list grows.
Answer the question as well as attaching the file
A file with no context invites more questions. Where a line asks about something sensitive, add a short note: what the document shows, what is missing and why, and who can explain it. A two sentence note on why a GST reconciliation has a gap saves three rounds of email.
Keep one record of what was asked and what was given
Buyers send follow up lists, and they refer back to earlier answers. Keep a single log of every request, the response, the date and the documents attached. If a dispute arises later about what was disclosed, this record matters, because disclosures often limit the seller's liability under the purchase agreement.
Where Synerger helps, and where it does not
In Synerger, the request list is imported from the buyer's Excel file into diligence request tracking. Each line gets an owner, a due date and a status, and the people answering can be internal staff or external advisers. Responses link to documents in the virtual data room, questions and answers stay attached to the request they belong to, and the audit trail records who uploaded and who opened what.
What the platform cannot do is decide what to disclose, how to describe a dispute, or whether a request goes beyond what the buyer reasonably needs. Those are judgements for the promoters, their CA and their lawyer. It also cannot make missing documents appear. If a licence was never renewed, the correct answer is to say so and explain what is being done about it.
A short checklist
- Read the whole list once with your advisers before answering anything
- Mark every line: available, needs work, not applicable, needs a conversation
- Assign an owner and a due date to every line
- Agree the scope of vague requests with the buyer in writing
- Add short context notes to sensitive answers
- Share personal data in summary first, full records only when needed
- Keep one log of requests, answers, dates and attachments
- Review the disclosure record with your lawyer before signing
To see how requests, documents and questions sit together in one place, read about the due diligence module.