--- title: "Michigan M&A Due Diligence Checklist [2026]" description: "Michigan M&A due diligence checklist covering LARA licensing, MBCA requirements, and Detroit and Oakland County legal considerations." canonical: "https://acquisitionstars.com/resources/due-diligence-checklist" firm: "Acquisition Stars" practice: "M&A and securities law" office: "Novi, Michigan (serves clients nationwide)" contact: "consult@acquisitionstars.com | 248-266-2790" --- # Michigan M&A Due Diligence Checklist ### IMPORTANT LEGAL DISCLAIMER **NO ATTORNEY-CLIENT RELATIONSHIP:** Use of this resource does not create an attorney-client relationship. No attorney-client relationship is formed until you have signed a formal engagement agreement with Acquisition Stars Law Firm PLLC and paid the required retainer. **NOT LEGAL ADVICE:** The information provided by this resource is for general informational and educational purposes only and is not legal advice. Legal advice requires consideration of your specific circumstances, which this resource cannot provide. **NO CONFIDENTIALITY:** Information you enter into this form is NOT protected by attorney-client privilege or confidentiality. Do not submit sensitive or confidential information. **NO LIABILITY:** Acquisition Stars Law Firm PLLC expressly disclaims all liability with respect to actions taken or not taken based on any content from this resource. Your use of this resource is at your own risk. By continuing to use this resource, you acknowledge that you have read, understood, and agree to this disclaimer. Use this Michigan-specific resource to organize review of LARA licensing, MBCA records, and Detroit and Oakland County considerations. For general document categories and workstream assignments, use the [national M&A due diligence checklist](https://acquisitionstars.com/due-diligence-checklist). For Detroit-area deals, also see our [Wayne County M&A Due Diligence Guide](https://acquisitionstars.com/detroit-ma-due-diligence). LARA Licensing review MBCA Corporate records Detroit City considerations Oakland County Local considerations Review the Michigan checklist [Open the interactive tracker](https://acquisitionstars.com/tools/due-diligence-tracker) **Michigan M&A due diligence checklist:** A legal review framework for entity records, contracts, licensing, compliance, intellectual property, employment, litigation, real estate, and other matters that can affect a Michigan transaction. The appropriate scope depends on the target, industry, and transaction structure. ## Complete Due Diligence Categories ### Legal & Corporate Structure ✓ Corporate Documents Articles, bylaws, board resolutions, stock records ✓ Ownership Structure Cap table, voting agreements, transfer restrictions ✓ Compliance Matters Good standing, annual reports, regulatory compliance ### Financial & Accounting ✓ Financial Statements Audited/reviewed statements, tax returns, management reports ✓ Working Capital Analysis AR/AP aging, inventory levels, cash flow patterns ✓ Debt & Obligations Loan agreements, guarantees, off-balance sheet items ### Commercial & Operations ✓ Customer Analysis Top customers, concentration risk, contract terms ✓ Supplier Relationships Key vendors, supply chain risks, pricing agreements ✓ Operational Systems IT systems, processes, capacity utilization ### Human Resources ✓ Key Personnel Management team, retention risks, succession planning ✓ Employment Matters Contracts, non-competes, compensation plans ✓ Benefits & Plans Retirement plans, health benefits, ERISA compliance ### Intellectual Property ✓ IP Portfolio Patents, trademarks, copyrights, trade secrets ✓ Third-Party IP License agreements, infringement risks, royalties ✓ Protection Measures IP policies, employee assignments, confidentiality ### Real Estate & Assets ✓ Property Holdings Owned/leased properties, title issues, zoning compliance ✓ Equipment & Inventory Asset condition, depreciation, maintenance records ✓ Environmental Issues Phase I/II assessments, compliance, remediation ### Regulatory & Compliance ✓ Industry Regulations Licensing, permits, regulatory approvals ✓ Safety & Quality OSHA compliance, quality certifications, inspections ✓ Government Relations Government contracts, investigations, lobbying ### Litigation & Claims ✓ Pending Litigation Current lawsuits, claims, threatened actions ✓ Insurance Coverage Policy limits, claims history, coverage gaps ✓ Risk Mitigation Legal reserves, settlement strategies, prevention ## Structured Due Diligence Process ### Document Request Comprehensive document request list organized by category with specific items and explanations. [Generate Request List →](https://acquisitionstars.com/tools/due-diligence-tracker) ### Review & Analysis Systematic review process with risk assessment and issue identification for each category. [View Timeline →](https://acquisitionstars.com/resources/90-day-post-loi-timeline) ### Issue Resolution Structured approach to addressing findings with risk mitigation and deal structure adjustments. [Structure Solutions →](https://acquisitionstars.com/resources/deal-structure-guide) A checklist organizes requests. Legal counsel determines how Michigan legal findings affect the transaction. [Request Engagement Assessment](https://acquisitionstars.com/consultation/acquisition) ## Streamline Your Due Diligence Process ### Interactive DD Tracker Digital checklist with progress tracking, document management, and automated reporting capabilities. [Open the due diligence tracker](https://acquisitionstars.com/tools/due-diligence-tracker) ### Michigan Legal Diligence Support Legal diligence assistance for Michigan transaction teams, coordinated with the client's nonlegal advisors. [Request Engagement Assessment](https://acquisitionstars.com/consultation/acquisition) Need immediate assistance? Call [(248) 266-2790](tel:+1-248-266-2790) ## Essential DD Resources ### 90-Day Timeline Complete timeline integrating due diligence with deal closing process. View Timeline → ### LOI Negotiation Guide Review due diligence covenants, access rights, and transaction-document provisions. Read Guide → ### Quality of Earnings Tool Analyze financial performance and identify earnings quality issues. Use Analyzer → ## Michigan-Specific Due Diligence Requirements Michigan business acquisitions can involve state and local requirements that warrant a separate legal review. The applicable requirements depend on the target's entity type, industry, licenses, locations, assets, and transaction structure. ### LARA Licensing & Regulatory Compliance Michigan's Department of Licensing and Regulatory Affairs (LARA) oversees licenses and regulatory programs across multiple industries. Review whether a license remains effective after the proposed transaction, requires notice or approval, or requires a separate application. #### High-Risk Regulated Industries (LARA) - • **Healthcare:** Home health (MCL 333.20101), hospice, adult foster care, and skilled nursing licenses may depend on ownership, management, and regulatory approval requirements. - • **Construction:** Contractor licenses (residential builders, mechanical, electrical, plumbing) under MCL 339.601-339.6119 are individual-specific, not transferable to new entity. - • **Food & Beverage:** Review MLCC requirements, local approvals, transfer procedures, and any conditions attached to the applicable liquor license. - • **Childcare:** Review daycare and childcare center licensing requirements under MCL 722.111-722.128, including ownership, background-check, and facility requirements. - • **Transportation:** School bus, limousine, medical transport licenses. Drug testing programs, driver qualification files, vehicle inspections must continue uninterrupted. #### Critical LARA Due Diligence Items 1. 1. **Current License Status:** Verify active status on LARA website + physical license copies. Check for any disciplinary actions, probation, or provisional status. 2. 2. **Renewal Schedule:** Note all renewal dates. Michigan licenses expire on specific dates (often June 30 or December 31). Budget renewal costs into working capital. 3. 3. **Transferability Analysis:** Determine how an asset purchase, equity purchase, merger, or change of control affects each license and approval. 4. 4. **Compliance History:** Request available inspection reports, violation notices, consent orders, and corrective action plans for the agreed review period. 5. 5. **Key Personnel Requirements:** Many licenses require designated qualified manager (QM) or responsible party. If QM is departing owner, buyer must designate new QM pre-closing. #### ⚠️ Common LARA Pitfall A buyer should not assume that a seller's license transfers automatically. Confirm the regulator, license holder, transaction-triggered notice or approval requirements, and the effect of the proposed structure before closing. The transaction documents may need a regulatory covenant, cooperation obligation, approval condition, or other provision tailored to the applicable licensing process. ### MBCA Corporate Formalities & Governance Requirements The Michigan Business Corporation Act (MBCA, MCL 450.1101 et seq.) governs Michigan corporations and addresses corporate authority and records. Review the target's governing documents, ownership records, approvals, and historical actions for issues relevant to the proposed transaction. #### Essential MBCA Due Diligence Checklist ##### Formation & Organizational Documents - □ **Articles of Incorporation** (filed with MI Dept. of LARA) with all amendments - □ **Bylaws** (current/amended) - verify quorum requirements, board size, voting thresholds - □ **Good Standing Certificate:** Obtain the certificate from Michigan LARA with the recency required by the transaction documents, any lender or party requirements, and the current diligence scope. - □ **Annual Filings:** The current due date for profit corporations is May 15, the current due date for nonprofit corporations is October 1, and the current due date for LLC annual statements is February 15. Verify the entity's current requirements with [Michigan LARA's annual filing guidance](https://www.michigan.gov/lara/bureau-list/cscl/corps/michigan-business-roadmap/annual-reports-and-annual-statements). ##### Stock & Ownership Records - □ **Stock ledger** showing all issuances, transfers, cancellations with dates - □ **Stock certificates** (physical copies or affidavits of loss if missing) - □ **Buy-sell agreements**, voting trusts, shareholder agreements (check for transfer restrictions, ROFR, drag-along rights) - □ **Options/warrants/convertible notes** - any contingent equity claims ##### Board & Shareholder Governance - □ **Board meeting minutes** for the agreed review period, including notice, quorum, and approval of major actions - □ **Shareholder meeting minutes** (annual meetings + special) - verify election of directors, amendment approvals - □ **Written consents** (if used in lieu of meetings) - verify unanimous consent where required - □ **Authority for transaction** - board resolution + shareholder approval (if required by articles/bylaws) ##### Corporate Actions Requiring Review - □ **Stock issuances** - confirm compliance with securities laws (MI Uniform Securities Act 451.2101 et seq.) - □ **Mergers/acquisitions** - prior M&A may have created successor liability issues - □ **Amendments** - changes to authorized shares, par value, rights/preferences - □ **Dividends/distributions** - verify compliance with MBCA solvency requirements (MCL 450.1345) #### ⚠️ Common MBCA Red Flags - 1. **Missing Corporate Records:** No minute book, stock ledger, or board minutes = cannot verify clean title. Requires pre-closing affidavits, indemnities, and potentially quiet title action. - 2. **Unauthorized Actions:** Major transactions (asset purchases, significant debt) without board approval = voidable under MBCA. May need shareholder ratification pre-closing. - 3. **Improper Stock Issuances:** Stock issued for insufficient consideration or without proper documentation = potential rescission rights for shareholders. - 4. **Transfer Restriction Violations:** Prior stock transfers violated buy-sell agreement or bylaws = clouded title, potential litigation from non-selling shareholders. ### Michigan Tax Clearance & Liability Transfer Michigan tax and employment laws can create successor-related obligations in some transactions. Review the applicable statutes, tax status, clearance procedures, and transaction structure with the relevant legal and tax advisors. #### Required Michigan Tax Clearances (Asset Purchases) - 1. **Sales & Use Tax Clearance (MCL 205.27a):** Obtain certificate from MI Dept of Treasury confirming no outstanding sales/use tax liabilities. Asset purchasers liable for unpaid seller sales tax unless clearance obtained. - 2. **Withholding Tax Verification (MCL 206.711):** Confirm seller current on employee withholding tax remittances. Request MI W-2s, federal payroll returns, and proof of payment for the agreed review period. - 3. **Unemployment Insurance Tax (MCL 421.15):** Verify seller current on UI contributions. Buyer may be liable for delinquent UI tax if successor employer under MESA (Michigan Employment Security Act). - 4. **Property Tax Status:** Confirm no delinquent property taxes on owned real estate or personal property. Request paid tax bills for the agreed review period. - 5. **City/Local Taxes:** Many Michigan cities impose income tax (Detroit, Grand Rapids, Lansing, etc.). Verify compliance with local withholding and filing requirements. #### Best Practices for Michigan Tax Due Diligence 1. → **Request Tax Clearance:** Confirm the applicable Michigan Treasury procedure and incorporate sufficient processing time into the closing plan. 2. → **Address Tax Exposure in the Deal Documents:** Consider the appropriate tax representations, covenants, indemnification, clearance requirements, and any negotiated escrow based on the identified risk. 3. → **Review Available Historical Tax Returns:** Request the available Michigan income, sales and use, withholding, and unemployment insurance tax returns for a scope and review period appropriate to the transaction and requested by the relevant legal and tax advisors. Confirm filing and payment status. 4. → **Check for Audits/Disputes:** Ask seller to disclose any ongoing audits, disputes, or notices from MI Treasury. Unresolved disputes can delay clearances. 5. → **Nexus Analysis:** If seller has multi-state operations, verify Michigan nexus analysis is correct. Incorrect nexus = underpaid Michigan tax = buyer exposure. #### 💡 Pro Tip: Bulk Sales Compliance (Repealed but Still Relevant) Michigan repealed its Bulk Sales Act in 2012, but a transaction team should still review UCC, judgment, and tax lien searches and confirm the required payoff, release, and closing-delivery procedures for identified liens. ### Detroit Metro & Oakland County Due Diligence Considerations Southeast Michigan (Wayne, Oakland, Macomb counties) has unique regulatory, tax, and economic development considerations that materially impact transaction structuring and risk assessment. #### Wayne County/Detroit Specific Items - • **Detroit City Income Tax:** Confirm the rates and withholding rules in effect for the relevant periods and review the seller's compliance for employees working in Detroit. - • **Detroit Property Tax Delinquencies:** Detroit has complex property tax foreclosure process. Run full title search + tax status check for any Detroit real estate included in deal. - • **Detroit Business License Requirements:** Many business types require Detroit business licenses separate from state licenses. Verify seller holds current license; buyer must obtain new license post-closing. - • **Renaissance Zones & Tax Abatements:** If seller benefited from Detroit Renaissance Zone status or tax abatements, verify transferability. Many abatements are business-specific and don't transfer to new owner. - • **Bankruptcy/Restructuring Implications:** Detroit's 2013 bankruptcy may have affected supplier contracts, municipal agreements, or property interests. Review any pre-2014 municipal contracts. #### Oakland County Specific Items - • **Local Income Tax:** Pontiac is on Michigan Treasury's current city income-tax list. Check the [current Michigan Treasury list](https://www.michigan.gov/taxes/citytax/what-cities-impose-an-income-tax) for each target location, then review the applicable filing and withholding requirements. - • **Obsolete Property Rehabilitation Act (OPRA):** OPRA is Michigan's property-tax exemption program for eligible rehabilitated commercial and commercial housing property. If target property uses OPRA, review its certificate, current status, and transaction and transfer implications under [Michigan Treasury's OPRA guidance](https://www.michigan.gov/taxes/property/exemptions/community-development/obsolete-property-rehabilitation-act). - • **Environmental - Historical Industrial Sites:** Oakland County has numerous legacy manufacturing/industrial sites (automotive suppliers, tool & die shops). Phase I/II environmental assessments critical. - • **Oakland County Economic Development Incentives:** If seller received Oakland County brownfield credits, MEGA credits, or other incentives, determine transferability and clawback provisions. - • **Healthcare Corridor (Royal Oak, Southfield, Troy):** For healthcare businesses in Oakland's medical corridor, verify compliance with local zoning, parking, and healthcare facility regulations. #### Regional Economic Development Due Diligence Michigan offers numerous state and local economic development incentives through **MEDC (Michigan Economic Development Corporation)**, **local DDA/LDFA (Downtown Development Authorities/Local Development Finance Authorities)**, and **MEGA tax credits**. These can significantly impact transaction value: - ✓ **Michigan Business Development Program:** Performance-based grants/loans for job creation. Verify seller compliance with job creation/retention requirements; non-compliance = clawback risk. - ✓ **Renaissance Zones (multiple MI cities):** Zero state/local taxes for qualifying businesses in designated zones. Verify zone status and transferability post-acquisition. - ✓ **Brownfield Redevelopment Credits:** TIF (tax increment financing) for environmental cleanup. If seller's site has brownfield credits, determine if credits attach to property or entity. - ✓ **OPRA Certificates:** For property participating in Michigan's Obsolete Property Rehabilitation Act (OPRA) property-tax exemption program, confirm the certificate and current status, then review transaction and transfer implications under [Michigan Treasury's OPRA guidance](https://www.michigan.gov/taxes/property/exemptions/community-development/obsolete-property-rehabilitation-act). #### 💼 When to Engage Local Michigan Counsel Out-of-state transaction teams may benefit from Michigan M&A counsel when the transaction involves: - • Deals involving LARA-regulated industries (healthcare, childcare, construction, food service) - • Detroit/Wayne County transactions (complex tax, regulatory, and economic development landscape) - • Transactions with Michigan economic development incentives (clawback/transferability analysis) - • Manufacturing/industrial businesses (environmental, successor liability, and automotive supply chain considerations) - • Transactions with entity, licensing, tax, environmental, real estate, or local-law questions requiring Michigan analysis ## Related Articles ### National M&A Due Diligence Checklist The national checklist covers general document categories, workstream assignments, and review priorities. ### M&A Due Diligence Process Guide The process, timeline, workstreams, and effect of findings on deal terms. ## Discuss the Michigan legal diligence scope Submit the transaction details for an engagement assessment. ### Request Engagement Assessment Submit your transaction details for review. Michigan-specific legal review coordinated with the broader transaction team. ## Legal counsel for this topic Acquisition Stars handles M&A transactions nationwide and works with securities counsel on securities matters. Alex Lubyansky leads the M&A engagements. [Closest fit for this topic Due diligence attorney Legal due diligence for acquisitions and divestitures.](https://acquisitionstars.com/due-diligence-attorney) [Due diligence services Due diligence services for business buyers and investors.](https://acquisitionstars.com/services/due-diligence) [Business acquisition lawyer Legal counsel for buyers from letter of intent through closing.](https://acquisitionstars.com/business-acquisition-lawyer) [Michigan service areas Acquisition Stars serves clients across Michigan and nationwide.](https://acquisitionstars.com/locations) [Request Engagement Assessment](https://acquisitionstars.com/consultation) --- Source: https://acquisitionstars.com/resources/due-diligence-checklist Markdown version generated for machine readers. Canonical HTML at the source URL.