A CPG acquisition is not just a purchase of inventory and a trademark. The buyer is acquiring product specifications, commercial relationships, consumer-facing claims, and operating assumptions that must continue to work after closing. See our M&A due diligence guide and M&A legal services for the broader transaction process.
Brands and Intellectual Property
Confirm who owns the names, logos, packaging artwork, formulas, domain names, social accounts, and other brand assets. The review should cover trademark registrations, founder and contractor assignments, license scope, geographic rights, and restrictions on use after a change of control. Packaging and promotion also require attention to claims substantiation and third-party content rights.
Retailer, Distributor, and Co-Manufacturer Contracts
Retailer, distributor, broker, co-manufacturer, supplier, warehousing, and logistics agreements can determine whether the business operates normally on day one. Review assignment and change-of-control provisions, termination rights, exclusivity, pricing, service levels, minimum volumes, audit rights, chargebacks, deductions, and indemnity provisions. Co-manufacturing agreements should also address specifications, quality, tooling, supply continuity, confidentiality, and the ability to move production.
Compliance, Recalls, and Product Liability
Legal diligence should map product categories and channels to the compliance obligations that apply to them. The practical review includes labels and substantiation, testing records, complaint logs, recall or withdrawal history, quality systems, regulator correspondence, insurance coverage, and supplier certifications. Product-liability exposure can persist after closing, so transaction documents should allocate responsibility for pre-closing events through tailored representations, disclosures, indemnities, and claim procedures.
Working Capital and Inventory
Inventory is often the most transaction-sensitive component of working capital in a CPG deal. Evaluate aging, spoilage, obsolescence, expiration, returned goods, slow-moving stock, consigned inventory, and reserves. Customer deductions, promotional allowances, rebates, and distributor chargebacks can change the practical value of accounts receivable and inventory. The working-capital target and true-up provisions should reflect the target's actual operating cycle.
Deal Documents and Post-Close Planning
Diligence findings should become concrete deal protections. Depending on the transaction, that can include conditions tied to material consents, special representations concerning intellectual property or compliance, disclosure schedules for claims and contracts, indemnity provisions, escrow or holdback arrangements, and transition services. Before signing, identify ownership transfers, retailer and distributor communications, supplier coordination, product governance, and the handoff of complaint, recall, and insurance records.
Assess the Legal Work Before Committing to the Deal
A transaction-specific review can identify the contracts, regulatory issues, and closing deliverables that need attention before the purchase agreement is finalized.
Request Engagement AssessmentFrequently Asked Questions
What is different about CPG M&A due diligence?
CPG diligence connects ordinary M&A work with the operating realities of branded products. A buyer must verify brand ownership, commercial contracts, co-manufacturing arrangements, product claims, recall history, inventory condition, and the working capital that supports the business.
Which CPG contracts need special attention in an acquisition?
Retailer, distributor, co-manufacturing, logistics, licensing, and supplier contracts should be reviewed for change-of-control and assignment provisions, termination rights, exclusivity, pricing, volume commitments, chargebacks, deductions, and indemnity obligations.
How do recall and product-liability risks affect deal terms?
The review should cover recall history, complaint files, testing records, insurance, supplier specifications, and regulatory correspondence. Findings can affect representations, indemnities, escrow or holdback structure, and responsibility for pre-closing claims.