M&A target company research checklist

01What a first-pass M&A screen is for

Corporate development teams, search-fund buyers and advisers all start the same way: a long list of possible targets and too little time. The first-pass screen is not due diligence. Its job is to decide, quickly and defensibly, which names deserve a call, which deserve a deeper look and which should be dropped.

A good screen is consistent. Every target gets the same sections in the same order, every figure carries a date and a source, and anything you could not verify is written down as a gap rather than guessed. That consistency is what lets you compare five targets side by side in a single meeting, starting from a structured research dossier for a target company.

021. Confirm identity and structure

Pin down the exact legal entity, the ticker, the industry classification and the headquarters. Many companies share names, and brands are often owned by a parent with a different name. Note former names too: they matter when you search for older documents and litigation.

Check whether the public entity is the business you actually want, or a holding company with several segments. If you only want one segment, your later work is about carve-out economics, not the whole group.

032. Five-year financial trend

Collect five fiscal years of revenue, operating income, net income, operating cash flow and cash. Look for direction and consistency, not a single headline number. Three real profiles from our company pages show how different the stories can be:

The Intel dossier shows a business whose revenue fell from $79.0 billion in fiscal 2021 to $52.9 billion in fiscal 2025, with a net loss of $18.8 billion in 2024. For a buyer of assets or a partner, that is a very different conversation than for an acquirer of a growing company. Pfizer shows why one-off years need context: revenue of $101.2 billion in 2022 fell to $59.6 billion in 2023, a swing you would want to explain before modelling anything.

043. Cash, capital and how growth is funded

Profit and cash are not the same. Compare operating cash flow with net income every year. Persistent gaps in either direction deserve a note: cash well above profit can mean large non-cash charges, cash well below profit can mean working capital is absorbing growth.

Note the cash balance at the latest year-end and any large changes in shares outstanding, which can signal acquisitions paid in stock or buybacks. Then ask the most practical question of all: could this company fund its own plan for the next two years, or will it need a buyer or partner to do so?

The comparison is often revealing. Adobe, for example, reported operating cash flow of $10.0 billion in fiscal 2025 against net income of $7.1 billion, while Pfizer reported $11.7 billion of operating cash flow against $7.8 billion of net income. In both cases cash ran ahead of reported profit, which is worth understanding before you value either business on earnings alone.

054. Leadership and governance

List the chief executive, the finance chief and the board chair, with the year each took the role. Then check the last twelve months for leadership announcements. A recent change at the top often reopens strategic options, including asset sales. Long-tenured founder-leaders, by contrast, frequently shape how receptive a company is to an approach.

065. Material events and red flags

Build a dated timeline of material events for the last twelve months: acquisitions and disposals, major agreements, restructuring, leadership changes, impairments and any restatement. Flag the items that change valuation or risk. For example, our Cisco dossier records a restructuring announcement on 13 May 2026, which is exactly the kind of event a screen should surface and date.

Then read the risk factors in the most recent annual report. Do not copy the whole list. Pick the three that would most change your view if they came true, and write one line on each.

076. Competitors and market position

Name three to five competitors with a one-line reason each, and note where the target is gaining or losing ground. Peer lists also give you the comparables you will need for valuation later. Our Intel page, for instance, lists AMD, NVIDIA, Qualcomm, TSMC and Samsung Electronics, which spans design, manufacturing and memory, a useful reminder that a single company can sit in several competitive sets.

08The M&A target screening checklist

Copy this list into your screening template. Each line should end with a dated, sourced answer or the word "gap".

• Identity: legal name, ticker, industry, headquarters, former names
• Financials: five years of revenue, operating income, net income, operating cash flow, cash
• Funding: cash vs profit gaps, share count changes, self-funding capacity
• Leadership: CEO, CFO, chair, tenure, changes in the last 12 months
• Events: dated timeline of acquisitions, agreements, restructuring, restatements
• Risks: the three company-specific risks that would change your view
• Market: three to five competitors with a reason each
• Gaps: everything you checked and could not verify

Our research dossier for target company screening covers sections one to six of this list from public records, with numbered citations, so the team can debate the shortlist instead of building it.

09Where first-pass screens go wrong

Mixing fiscal years. Companies close their years in different months. Always label figures with the fiscal year and the period end date before comparing two targets.

Trusting headlines over filings. News is useful for prompts, not for numbers. Every figure in a screen should trace back to an annual or quarterly report.

Hiding gaps. A screen that says "no segment data found" is more useful than one that estimates it. The gaps become your first questions for management.

For the reading technique behind steps two and five, see how to read an annual report in 15 minutes. For the broader nine-step method, see how to research a target company. When you are ready to compare shortlisted names, open a cited dossier on each target and work through the sections side by side.

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