A CPG acquisition requires review of inventory, trademarks, 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.
How do you scope legal review for a CPG acquisition?
Start with the transaction stage, the assets or ownership interests being acquired, and the next decision deadline. For CPG M&A advisory work, define which questions need legal counsel and which belong to your broker, financial adviser, accountant or operating team.
- Identify the proposed deal. Record whether you are buying or selling, the proposed structure and the documents already exchanged. Use a non-confidential summary for initial intake.
- Map the rights the business needs. List the brands, formulas, packaging assets and material retailer, distributor and co-manufacturing relationships. Identify ownership or transfer questions for counsel to review against the actual documents.
- List the product and operating issues. Flag available complaint, recall, testing, insurance and inventory records. Assign open accounting or operational questions to the relevant advisers rather than assuming legal diligence answers them all.
- Connect open issues to the signing plan. Ask which questions need resolution before the next commitment and how the proposed documents address those that remain open. Keep responsibility and deadlines clear across the deal team.
The sections below explain the records and provisions behind that review. For transaction-specific legal scope, see our M&A legal services. Use Request Engagement Assessment to share your role, stage, open issue and next deadline. Arrange confidential document sharing after intake.
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.
Turn the product and contract records into closing decisions
A diligence request becomes useful when the team can explain what each record changes about the proposed transaction. Organize findings by product, commercial relationship and responsible adviser. For each open question, identify the supporting record, any missing information, the decision it affects and the date by which an answer is needed. Keep legal conclusions separate from accounting estimates and operational judgments, then bring them together when drafting the agreement.
Reconcile the brand chain of title with the assets being sold
Start with the brands and products that generate the target's revenue. Trace registered and unregistered marks, packaging designs, formulas, photographs and other material rights back to the documents through which the business obtained them. A founder's involvement in creating an asset leaves open whether the selling entity owns it. A supplier may own tooling or a formula even where the target markets the finished product under its own brand.
Compare that record with the purchased-assets schedule and any excluded assets. Identify licenses that need consent, rights limited by territory or channel, and accounts registered to individuals. Ask who obtains any missing assignment and when it will be delivered. Where a right remains disputed or unavailable, the parties must decide whether to change the perimeter, seek another arrangement or make its resolution a closing condition. Record any continued license or seller access separately from the transfer of ownership.
Check whether production and distribution can continue after closing
A list of important contracts should show the legal counterparty, covered products, term, renewal provisions and proposed transfer step. Compare the contract name with the entity being acquired and the party expected to perform after closing. An ownership purchase and an asset purchase may raise different questions under the same contract. Obtain the relevant review before assuming a supplier or retailer relationship will continue on its existing terms.
For co-manufacturing, examine who controls specifications, approves changes, owns tooling and handles rejected batches. Ask the operations team what happens if production must move: availability of the formula, equipment compatibility, packaging supply, testing, lead times and commercial approvals can affect continuity. The agreement should reflect the transition the parties can actually implement. Assign responsibility for consents, revised supply arrangements and any temporary services rather than leaving those tasks as an informal closing expectation.
Separate product exposure from the proposed insurance response
Build a product issue file covering complaints, test results, returns, withdrawals, recalls and regulator correspondence that the seller can provide. Identify which product, batch, period and entity each record concerns. Ask the legal and product specialists which requirements apply to the product and selling channel. Food, cosmetics, supplements and other consumer goods can raise different questions; a general compliance representation leaves the underlying product review unfinished.
Then ask the insurance adviser to assess the actual policies, reporting requirements, exclusions and any proposed coverage after the transaction. Contractual responsibility and available insurance are separate analyses. If a known issue remains, discuss whether it needs further investigation, corrective work, a specific disclosure, a tailored indemnity or another negotiated arrangement. Specify who handles consumer communications and access to historical files after closing, including how the parties cooperate if a later complaint concerns pre-closing production.
Test inventory and deductions against the price adjustment
Ask the accountant and operations team to reconcile stock records to the target's definitions of saleable inventory. Raw materials, finished goods, promotional packaging, goods held by third parties and returned products can require different treatment. Review whether quantities, cost, reserves and ownership are supported by the available records. Identify obsolete packaging, approaching expiration dates and stock tied to a lost retailer or discontinued product before relying on the inventory balance.
Customer deductions deserve their own schedule. A receipt after closing may relate to a pre-closing promotion, return or distributor chargeback. Define how those items affect receivables, reserves, working capital and any later reimbursement. Have both sides work through an illustrative transaction using the target's categories so the same economic item receives consistent treatment across the price adjustment and indemnity provisions. Agree on report access, preparation responsibility, objection procedures and the process for resolving accounting disagreements.
Make the transition plan usable by the operating team
Convert the agreed closing requirements into an owner-and-deliverable list. Identify who transfers brand assets and accounts, communicates with commercial partners, confirms available inventory and obtains the records needed for quality and complaint handling. Distinguish signing conditions, closing deliverables and work to be completed afterward. Record the dependency where one task requires another person's approval or access, and specify how a delay affects the planned handoff.
If the seller will provide transition services, define the actual work and who can request it. Address access to systems and records, confidentiality, payment, service boundaries and the end of the arrangement. Before closing, ask the team to explain how orders, product questions, returns and retailer deductions will be handled during the transition. Use those answers to identify unfinished operational decisions and the agreement provisions that must support them.
Verify public product records against the seller’s files
Search the correct product and legal entity
Build a search record using the target’s legal name, former names, brand names and relevant product descriptions. For products within FDA jurisdiction, the FDA recall and safety-alert index provides public notices that can help identify questions for diligence. FDA explains that the index covers certain publicly announced recalls; its enforcement reports and archives provide additional records. A clear search result therefore needs to be reconciled with the seller’s complaint, testing, withdrawal and recall files. A public search alone leaves questions about unannounced events and internal investigations.
For each relevant record, identify the affected product, distribution period, corrective work, correspondence and remaining obligations. Ask the operating team which items remain in inventory or the distribution chain. Counsel can then connect the factual record with proposed representations, disclosed exceptions and allocation of responsibility. Product classification and the applicable regulatory regime determine which specialist questions need attention; a food brand, a cosmetic product and another consumer product may require different reviewers. Keep that assignment in the diligence plan so an unresolved classification question reaches the appropriate adviser before signing.
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.