M&A BUYER DUE DILIGENCE CHECKLIST - Smartsheet Inc.

1 FINANCIALOWNERCOMPLETE?DATE OF COMPLETIONNOTESG eneral expensesProfit marginsWhere revenue comes fromProfits increasing or decreasingList of creditors and debtorsAssumption of debt obligationsFinancial resources available for operations during the transitionFinancial resources available to cover transaction-related costsConditions on assets and liensProblems with all existing contractsLitigation risksList of required capital expenditures and investmentsDeferred capital expensesAccuracy of future projectionsUncommon revenue recognition issues that impact the company or industryAR AgingOther AR issuesM&A BUYER DUE DILIGENCE CHECKLIST FINANCIAL DUE DILIGENCE CHECKLISTThis CHECKLIST contains documents and information

2 Related to finance that a seller might request from a BUYER . Quality of earnings report Unedited financial statements with comparable statements for the last year EBITDA and adjustments Financial statements from the last 3-5 years Margin statements List of one-time expenses Future budgets AP schedule Documentation of accounting procedures Cash flow and cash management techniques Existing short- and long-term debt Interest ra tes on existing d eb t Ability to service existing debt Ability to secure more financing Sha rehold er va lue a na lysis Compatibility audit Reconciliation audit Fixed and variable costs TECHNOLOGY & IP DUE DILIGENCE CHECKLISTThis CHECKLIST contains documents and information related to technology and intellectual

3 Property that a seller might request from a BUYER . TECH & IPOWNERCOMPLETE?DATE OF COMPLETIONNOTESIT costsIT up gra d es need ed Documentation of disaster recovery plans Domain names owned or usedPatents held (both foreign and domestic)Trademarks and service marks heldCopyrighted material used or ownedIP p rotection p rocesses, includ ing sta nd a rd agreements with employees, ex-employees, and consultantsAny exceptions to standard IP protection agreementsTrade secrets and steps to protect themCurrent IP litigationTrademark disputes that are in processWhich software titles are critical to standard ops, and licenses for that software How open source software is usedOdd or unusual escrow arrangementsResearch and development budget and plansPending patent applicationsPending patents clearance documentsId entities p rovid ed to or ob ta ined from third p a rties for IPLiens on IPExclusive tech licenses that have been issued to third parties CUSTOMER / SALES / SUPPLIERS DUE DILIGENCE CHECKLISTThis CHECKLIST contains documents and information related to customers, sales, and suppliers that a seller might request from a BUYER .

4 CUSTOMER / SALES / SUPPLIERSOWNERCOMPLETE?DATE OF COMPLETIONNOTESI ssues tha t ma y ca use customers to lea ve (including the potential BUYER )Top customers and revenuesCustomer satisfactionList of customers lost within 3-5 yearsCustomer credit policiesCustomer backlogOrder bookConcentration risksSa les p ip elineSup p ly cha inWarranty issuesSa les terms a nd p oliciesLevels of exchanges and refundsSa les comp ensa tionSea sona lity of revenueKey sup p liersBreakdown of cost of goods soldProduct development expenseSup p lier service a greements a nd insura nce coverageSTRATEGIC FIT CHECKLISTThis CHECKLIST contains documents and information related to the strategic fit of the deal that a seller might request from a BUYER .

5 STRATEGIC FITOWNERCOMPLETE?DATE OF COMPLETIONNOTESFit based on business realities or expectationsAre target company s products complementary to BUYER s products?Length and cost of integration processCost savings and other synergies that may occur after integrationWill marginal costs will rise after integration?Possible revenue enhancements after integrationRetention plan for key staff membersMATERIAL CONTRACTS DUE DILIGENCE CHECKLISTThis CHECKLIST contains documents and information related to technology and material contracts that a seller might request from a BUYER . MATERIAL CONTRACTSOWNERCOMPLETE?DATE OF COMPLETIONNOTESWhy is the owner selling?Have there been any previous attempts to sell?Has the company merged with or acquired other companies?

6 Contracts with customers and suppliersContracts that involve payments exceeding a material dollar amountEquipment owned or leasedContracts that, if terminated, would bring about a material adverse effect on the companyList of parties that have to approve material contracts following a shift in control or assignmentContracts or agreements that impose competition restrictions on the company (or the BUYER ) in lines of business, in a geographic region, or with another personCredit agreements, guaranties, and loansDistribution, sales agency, dealer, or advertising agreementsEquity finance agreementsExclusivity agreementsFranchise agreementsInd emnifica tion a greementsLicense agreementsLimited liability company/operating agreementsPartnership/joint venture agreementsPower of attorney agreementsReal estate leases/purchase agreementsSettlement a greementsUnion contracts/collective bargaining agreementsEMPLOYMENT / MANAGEMENT DUE DILIGENCE CHECKLISTThis CHECKLIST contains documents and information related to employees and management that a seller might request from a BUYER .

7 EMPLOYEE / MANAGEMENTOWNERCOMPLETE?DATE OF COMPLETIONNOTESO rganization chart and biographical information for ma na gementOfficer, director, key employee, and related party employment, consulting, and loan agreements, and documents pertaining to additional transactions with those partiesOfficer, director, and key employee compensation schedule for the three fiscal years; salary, bonuses, and non-cash recompense ( , car or property usage) as separate line itemsEmployment guides and protocolsEmployee count, including current employees, vacant positions, anyone due for retirement, and those who have resigned but not yet leftKey p ersonnel ga ined a s p a rt of mergerAgreements or incentive arrangements for key employees who will remain with the BUYER The likelihood of layoffs and severance due to the acquisitionExisting operational redundancies, and difficulty of eliminating themAll nondisclosure, non-competition, and non-solicitation agreements between the company and employeesCurrent issues, like alleged wrongful termination, harassment, discrimination.

8 Or other legal cases pending with current or former employeeHow the company treats personnel as independent contractors compared to employeesCriminal proceedings or notable civil litigation against any key employees or managers Copies of pensions, profit shares, deferred compensation, retirement plans, and other employee benefits Informa tion a b out severa nce/termina tion p a y, sick leave, vacation balances, loans, credit extensions, loan guarantees, relocation or educational assistance, tuition, workers compensation, executive compensation, fringe benefits, or other benefitsAnnual leave, sick leave, and other forms of leave policiesInforma tion on a ny ESO P , a nd sched ule of gra ntsVerification of observance with IRS section 409A issued with stock optionsSumma ry of incentive p la ns or b onus p la ns for management not noted in the IRS 409A verification, and for other modes of non-cash management compensationThe likelihood of needing to comply with IRS section 280G (golden parachute)

9 Regulations as related to potential acquisitionsThree years of actuary reportsSumma ry of la b or conflictInforma tion on a ny p end ing threa tened la b or stoppageInforma tion concerning p a st la b or stop p a gesLITIGATION / LEGAL DUE DILIGENCE CHECKLISTThis CHECKLIST contains documents and information related to litigation and legal issues that a seller might request from a BUYER . LITIGATION / LEGALOWNERCOMPLETE?DATE OF COMPLETIONNOTESF iled and pending litigation, along with total complaints and pleadings Threatened or pending claims facing the company Pending or threatened governmental (SEC, FTC, FDA, etc.) proceedings against the company Settled litiga tion, includ ing terms of the settlements Matters in arbitration Consent decrees, judgments, injunctions, or orders Insura nce covering cla ims, a long with notices to insurers Attorney letters to auditors Civil litigation Compliance and regulatory matters Criminal law Human rights TAXES DUE DILIGENCE CHECKLISTThis CHECKLIST contains documents and information related to taxation that a seller might request from a BUYER .

10 TAXESOWNERCOMPLETE?DATE OF COMPLETIONNOTESThe last five years federal, state, local, income, sales, and other tax returns, plus any international returns filed Copies of correspondence or notices from foreign, fed era l, sta te, or loca l ta xing a uthority for filed ta x returns, along with failure to file notices Correspondence with tax authorities Out-of-the-ordinary correspondence with tax agenciesGovernment audits IRS Form 5500 for 401(k )s Settlement d ocuments from the IRS or other ta xing institutionsAgreements on tax sharing or transfer pricing Agreements that waive or change the statute of limitations on taxes Net operational losses or credit carryforwards Effects of changes in control on the availability of carryforwards ANTITRUST AND REGULATORY DUE DILIGENCE CHECKLISTThis CHECKLIST contains documents and information related to antitrust and regulatory issues that a seller might request from a BUYER .