Due Diligence Questions — Full List
Source: QA/JMS_Due_Diligence_Questions_REVIEWED.md
Last Updated: 2026-04-08
Total: 126 questions (59 Pre-LOI + 67 Post-LOI) | 7 Deal-Critical
PART 1: PRE-LOI QUESTIONS
1A. Revenue Sustainability & Backlog
→ Related: financials/revenue, company/customers
| # |
Question |
Status |
What We Know |
| 1 |
What drove the revenue jump from $2.0M (2024) to $3.7M (2025)? |
✅ ANSWERED |
War machine ramped up → increased demand for LANL parts. 2026 Q1 exceeding expectations and prior-year comps. Confirmed sustainable. |
| 2 |
Of the signed 2026 work ($2.9M), how much is fully funded PO vs. task-order dependent? |
✅ ANSWERED |
Fully funded under PO — firm revenue. |
| 3 |
Of the 2025 LANL revenue ($3.4M), how many distinct programs/groups/buyers? |
✅ ANSWERED |
49 different requestors in 2025 — highly diversified within LANL |
| 4 |
What is the current backlog? How much is awarded under PO today? |
✅ ANSWERED |
Current backlog: ~$1M under PO. |
| 5 |
What % of revenue is repeat/recurring work vs. one-off prototype? |
⚠️ PARTIAL |
Jobs range $500-$500K, 6-8 weeks to 6-8 months. No split data. |
| 6 |
Any contract cancellations, de-scopes, or significant delays in the last 3 years? |
✅ ANSWERED |
No cancellations. Several scope changes. Two contracts delayed due to customer redesign/spec changes — both held up by customer. |
| 7 |
What is the current bid pipeline? Open quotes, total value, typical win rate? |
✅ ANSWERED |
2026 bids: $1,444,006. Won: $430,686. Win rate: 29.8%. Open bids: $1,013,326. |
| 8 |
Customer concentration — growing, stable, or shrinking for top accounts? |
⚠️ PARTIAL |
LANL growing fast ($1.45M→$3.4M). SWRI declining. MSTS declining. |
1B. Owner Dependency & Transition
→ Related: people/owner-dependency, people/org-chart
| # |
Question |
Status |
What We Know |
| 9 |
If you disappeared for 90 days, what breaks? |
✅ ANSWERED |
Visual weld inspection may need subcontracting. Bill paying would need to be taken over or done remotely (as currently done). — Lower dependency than expected. |
| 10 |
What quoting, operational, or customer knowledge still sits in your head? |
⚠️ PARTIAL |
25 hrs/wk, 75% strategic. "Moderate, not absolute" dependency. |
| 11 |
What customer relationships are purely personal to you and wouldn't transfer? |
✅ ANSWERED |
Government relationships — not allowed to have close personal ties. Relationships are institutional, not personal. Low transfer risk. |
| 12 |
What transition support are you willing to provide? Duration, hours/week, compensation? |
⚠️ PARTIAL |
FAQ says willing. Our narrative proposes $2,500/mo for 12-18 months. |
| 13 |
Will you make personal introductions to all key LANL contacts? |
❌ OPEN |
|
| 14 |
Will you assist with the NQA audit if it falls during/after closing? |
❌ OPEN |
|
1C. Key People
→ Related: people/org-chart, people/compensation, people/talent-pipeline
| # |
Question |
Status |
What We Know |
| 15 |
Key employees (Mike, Salina, Sean, James) — tenure, comp, flight risk? |
⚠️ PARTIAL |
Roles and ranges ($20-$27/hr machinists). No tenure specifics. |
| 16 |
Who might leave if a sale occurs? |
✅ ANSWERED |
Main team will stay. |
| 17 |
Any upcoming retirements or key-person risks? |
❌ OPEN |
|
| 18 |
Any family members of the owner employed? |
✅ ANSWERED |
No family members employed. |
| 19 |
Is compensation below, at, or above market? Any recent raises? |
⚠️ PARTIAL |
$20-$27/hr. LANL competes for talent locally. ZipRecruiter posts $20-$35/hr. |
1D. Certifications & Change-of-Control Risk
→ Related: company/certifications, quality/certifications-detail, quality/open-findings
| # |
Question |
Status |
What We Know |
| 20 |
Do certs and LANL IESL listing transfer with entity sale? 🔴 |
✅ ANSWERED |
Confirmed YES — certs and LANL IESL listing transfer with entity sale. |
| 21 |
What LANL approvals/notifications required for ownership change? Blackout period? 🔴 |
✅ ANSWERED |
None required. Sale has happened before with no issues. Nothing has changed since. |
| 22 |
Has LANL handled a vendor ownership change with JMS or similar before? |
❌ OPEN |
|
| 23 |
What are the open corrective actions from the Dec 2025 ISO audit? How severe? 🔴 |
✅ ANSWERED |
All supplier corrective actions submitted and approved by LANL. Objective evidence submitted last week, in LANL's hands to accept and close out the SCARs. |
| 24 |
Expected outcome of the April 2026 NQA audit? Known gaps? 🔴 |
✅ ANSWERED |
No known gaps — have had this for decades. Expects some findings (auditors always find something) but no showstoppers. |
| 25 |
Which certs/list placements are hardest for a competitor to replicate? |
❌ OPEN |
Moat assessment. |
1E. Equipment Condition
→ Related: equipment/machine-inventory, equipment/capex-assessment, equipment/software
| # |
Question |
Status |
What We Know |
| 26 |
Which 3 machines worry you most? Known maintenance issues? Downtime last 12 months? |
✅ ANSWERED |
The big 3 (likely compressor, Union B130, oldest Haas mills). Need specifics on which 3 in follow-up. |
| 27 |
Are any machines currently down or at reduced capability? |
❌ OPEN |
|
| 28 |
Capex likely in next 24-36 months? |
⚠️ PARTIAL |
FAQ: "one or two machines, $100K-$200K." No specifics. |
| 29 |
Machine utilization — overall and bottleneck machines? |
✅ ANSWERED |
50-60% overall (single shift). No per-machine data. Confirmed by seller. |
| 30 |
Materials they can machine (mild steel, stainless, Inconel, exotics)? |
❌ OPEN |
|
| 30a |
Sullair 25HP compressor (1994) — rebuilt? Backup compressor? |
❌ OPEN |
31 years old. Shop stops without it. Replacement $15-20K. |
| 30b |
Union B130 boring mill — how often used? Heidenhain TNC 355 control issues? |
❌ OPEN |
5-axis, massive envelope. Control retrofit $30-50K if it fails. |
| 30c |
Haas VF-5/40 and VF-10 (1998) — spindle rebuilds done? Known issues? |
❌ OPEN |
27+ years. Spindle rebuild $5-10K each. |
| 30d |
Mori Seiki MV-JR (1986) and SL-25 (1987) — production or backup? |
❌ OPEN |
40 years. Parts scarce. $10K/$19K replacement value. |
| 30e |
Makino U6 wire EDM — running well? Wire threading maintenance current? |
❌ OPEN |
2019, $150K replacement. |
| 30f |
Annual maintenance/repair spend on equipment? Ballpark last 2-3 years? |
✅ ANSWERED |
$50,517 from 2023-2025, or $16,840/year |
| 30g |
Equipment purchases planned or quoted but not yet executed? |
❌ OPEN |
Things seller knows need replacing. |
| 30h |
Preventive maintenance schedule — formal or informal? |
✅ ANSWERED |
Informal. Every 1-2 years HAAS technician for leveling and PM. All other machines maintained as needed. |
1F. Financials — Clarifications
→ Related: financials/summary, financials/balance-sheet, financials/profit-and-loss
| # |
Question |
Status |
What We Know |
| 31 |
Explain the negative checking balance (-$95K) on 12/31/2025 balance sheet |
✅ ANSWERED |
Bank was taken over by UMB Bank. During transfer, had to re-link accounts to QuickBooks creating duplicate entries. Has since been corrected — single checking account, old accounts removed. |
| 32 |
Any personal expenses running through the business? |
✅ ANSWERED |
Yes some: cell phones, some automotive parts/repairs, fuel, internet. |
| 33 |
Current shop rate? When last increased? Market comparison? |
✅ ANSWERED |
$150/hour, can vary, competitive with market. Government only allows 25% markup on products. |
| 34 |
What is the $25,245 Continuing Education expense? Recurring or one-time? |
✅ ANSWERED |
Recertification for owner and Sean Kelly for mass spectrometer leak testing certifications. Recurs every 3-5 years. |
| 35 |
What are the two notes payable (M&T Capital $42K, Regional Dev Corp $20K)? |
✅ ANSWERED |
M&T Capital $42K = Zeiss Duramax CMM. RDC $20K = grant to purchase CMM, should be forgiven at this time. |
| 36 |
Margin by type of work (milling vs. turning vs. welding vs. EDM)? |
❌ OPEN |
|
| 36a |
How quickly can you reprice when material costs move? Fixed-price or adjustable? |
✅ ANSWERED |
Fixed-price quotes. |
| 36b |
Average time from RFQ to award, and award to cash collection? |
✅ ANSWERED |
~60 days from RFQ to cash collection. |
| 36c |
Any unfunded pension or retirement obligations? |
⚠️ PARTIAL |
None that seller is aware of. Validate during post-LOI due diligence. |
| 36d |
Health insurance cost to the business annually? What plan? |
✅ ANSWERED |
Average 2023-2025: $21,853/year |
1G. Real Estate
→ Related: real-estate/property, real-estate/appraisal
| # |
Question |
Status |
What We Know |
| 37 |
Is the $1M RE asking price negotiable? |
⚠️ PARTIAL |
2023 appraisal = $1.0M. SBA will require current appraisal. |
| 38 |
Status of the mobile home? Occupied? Rental income? |
✅ ANSWERED |
Mobile home is rented to a worker. Provides employee housing benefit. |
| 39 |
Current annual property taxes? |
❌ OPEN |
Not in business tax returns — RE owned by David Hand personally, property taxes on his returns. Need to ask or check Los Alamos County assessor. |
1H. Operations Strategy
→ Related: company/overview, company/competitors
| # |
Question |
Status |
What We Know |
| 40 |
Do you run an "efficient" shop or leave capacity for rush orders? |
❌ OPEN |
Thomas flagged. Operating philosophy and pricing power. |
| 41 |
How much surge capacity available via outside suppliers? |
❌ OPEN |
~15% subcontracted. Need surge detail. |
| 42 |
Path from job-shop to proprietary/light manufacturing — what supports, what breaks? |
❌ OPEN |
Thomas flagged. Growth thesis. |
| 43 |
What hires, machines, changes needed to scale to $5-7M? |
✅ ANSWERED |
More shifts + more equipment. Straightforward scaling path. |
1I. Deal-Killers
→ Related: deal/risks
| # |
Question |
Status |
What We Know |
| 44 |
Any open or threatened lawsuits, claims, or disputes? |
✅ ANSWERED |
No open or threatened lawsuits, claims, or disputes. |
| 45 |
Any environmental issues — underground tanks, contamination, hazmat? |
⚠️ PARTIAL |
Sounds like no, but validate during post-LOI due diligence. |
| 46 |
Any OSHA citations or significant safety incidents? |
⚠️ PARTIAL |
Sounds like no, but validate during post-LOI due diligence. |
| 47 |
What's the single biggest risk a buyer is taking here? |
✅ ANSWERED |
Seller says biggest risk is NOT buying. Jona insulated from market fluctuations due to government ties. |
PRE-LOI QUICK-HIT LIST (If You Get One Call)
- What drove 2025 revenue jump? → ✅ ANSWERED (war ramp-up, 2026 Q1 confirming)
- Within LANL, is spend diversified across programs or concentrated?
- What approvals or risks exist if ownership changes?
- If you disappeared for 90 days, what breaks?
- Who are the key people I'm really buying — and who might leave?
- What are the open ISO corrective actions, and how's the NQA audit looking?
- Which 3 machines worry you most? (Specifically: compressor, Union B130, Haas spindles)
- What work has the best and worst margins? How fast can you reprice?
- What transition support will you personally provide?
- What are the two notes payable ($42K + $20K)?
- Any lawsuits, environmental issues, or safety problems?
- What's the single biggest risk a buyer is taking here?
- Annual maintenance spend on equipment — ballpark?
- How's the Makino EDM running? Calibration current on FARO/ZEISS?
- What would it take to scale to $5-7M?
PART 2: POST-LOI DUE DILIGENCE
2A. Contracts & Legal Review
→ Related: company/customers, company/certifications
| # |
Question |
Status |
What We Know |
| 48 |
Copies of LANL blanket agreements — change-of-control clauses 🔴 |
❌ OPEN |
SBA requires written proof contracts transfer. |
| 49 |
Any contracts non-assignable or require customer consent? |
❌ OPEN |
|
| 50 |
Copies of all customer contracts and blanket agreement templates |
❌ OPEN |
|
| 51 |
Cancellation clauses in long-term contracts? |
❌ OPEN |
|
| 52 |
Price escalation clauses? Fixed-price vs. adjustable? |
❌ OPEN |
|
| 53 |
Minimum-buy, multi-year, or guaranteed-volume arrangements? |
❌ OPEN |
|
| 54 |
Indemnification or hold-harmless clauses exposing JMS to downstream liability? |
❌ OPEN |
|
2B. Certifications & Quality — Detailed
→ Related: quality/certifications-detail, quality/inspection-equipment, quality/open-findings
| # |
Question |
Status |
What We Know |
| 55 |
Copies of all current certificates with expiration dates and audit schedules |
❌ OPEN |
NQA-1, ISO-9001, ITAR, NAP 401.1, AWS QC-1, DOE 414.1D. |
| 56 |
Does ownership change before/during NQA audit trigger reschedule or expanded scope? 🔴 |
❌ OPEN |
|
| 57 |
Any export-control, ITAR, UCNI incidents in the last 10 years? |
❌ OPEN |
|
| 58 |
Walk through the CAPA process — formal system or manual? |
⚠️ PARTIAL |
CIM mentions QA manual. No process detail. |
| 59 |
What % of revenue is rework, scrap, NCRs, or warranty/remake? Trend? |
❌ OPEN |
|
| 60 |
Recent audit reports and all open corrective actions (full detail) |
❌ OPEN |
|
| 61 |
Quality manual table of contents |
❌ OPEN |
|
| 62 |
Who calibrates FARO/ZEISS — in-house or service contract? Annual calibration cost? |
❌ OPEN |
NQA-1 requires traceable calibration. |
2C. Employee & Labor
→ Related: people/org-chart, people/compensation, people/talent-pipeline
| # |
Question |
Status |
What We Know |
| 63 |
Full employee roster with title, tenure, pay, certifications |
❌ OPEN |
|
| 64 |
Org chart |
❌ OPEN |
|
| 65 |
Would key employees consider retention agreements/stay bonuses? |
❌ OPEN |
|
| 66 |
Who leaves because owner leaves? |
❌ OPEN |
|
| 67 |
Turnover history by year and role |
❌ OPEN |
~20% overall, mainly lower-level. Minimal machinist turnover. |
| 68 |
Training reimbursement agreements or retention tools? |
❌ OPEN |
|
| 69 |
Any unionization efforts or labor disputes? |
❌ OPEN |
|
| 70 |
Drug testing requirements from customers? |
❌ OPEN |
|
| 71 |
Compensation, bonuses, benefits summary |
❌ OPEN |
|
| 72 |
Local talent pipeline — SFCC, apprenticeships, sources? |
⚠️ PARTIAL |
Apprenticeship pairing + SFCC programs noted. |
2D. Financial Records
→ Related: financials/summary, financials/balance-sheet
| # |
Question |
Status |
What We Know |
| 73 |
Monthly P&L for 2024 and 2025 (seasonality) |
❌ OPEN |
|
| 74 |
Current A/R aging report (detail behind $305K) |
❌ OPEN |
|
| 75 |
Current AP aging report |
❌ OPEN |
|
| 76 |
2/28/2026 or more current: BS, P&L, AR/AP, WIP |
❌ OPEN |
Lender will require current financials. |
| 77 |
Equipment loan/lease schedules (M&T $42K, Regional Dev $20K) |
❌ OPEN |
|
| 78 |
Insurance policies (GL, product liability, WC) — coverage and premiums |
❌ OPEN |
|
| 79 |
K-1 Schedules 2023-2025 |
❌ OPEN |
|
| 80 |
2022 tax return (1120-S) |
❌ OPEN |
Only have accountant FS. |
| 81 |
Outstanding tax liabilities that won't retire at close? |
⚠️ PARTIAL |
$54K routine accruals. |
| 82 |
Revenue by work type for last 3-5 years |
❌ OPEN |
|
| 83 |
Backlog report: job, customer, PO status, margin, ship/invoice date |
❌ OPEN |
|
2E. Equipment & Operations
→ Related: equipment/machine-inventory, equipment/tooling-inventory, equipment/software
| # |
Question |
Status |
What We Know |
| 84 |
PM logs and repair history for major equipment |
❌ OPEN |
|
| 85 |
Machine hours generated per year, by machine type |
❌ OPEN |
|
| 86 |
Downtime history for major equipment |
❌ OPEN |
|
| 87 |
Capex history for last 5 years |
⚠️ PARTIAL |
Sec 179: $0 (2023), $77K (2024), $138K (2025). |
| 88 |
Largest part sizes, weight limits, lifting capacity |
❌ OPEN |
|
| 89 |
Is the inspection room climate-controlled? |
❌ OPEN |
|
| 90 |
Tooling inventory changes since Jan 2024 ($773K)? |
❌ OPEN |
|
| 91 |
GibbsCAM v13 — perpetual or subscription? Transferable? |
❌ OPEN |
$16K replacement. |
| 92 |
Other software licenses? (CAD, ERP, scheduling, nesting, DNC) |
❌ OPEN |
|
| 93 |
ZEISS Duramax purchase motivation — contract requirement or general upgrade? |
❌ OPEN |
$80K, brand new (2024). |
| 94 |
What's on the Dell server/Synology NAS? |
❌ OPEN |
IT infrastructure continuity. |
2F. Facilities & Real Estate
→ Related: real-estate/property, real-estate/infrastructure, real-estate/appraisal
| # |
Question |
Status |
What We Know |
| 95 |
Roof, HVAC, electrical, compressed air — deferred maintenance? |
❌ OPEN |
|
| 96 |
Electrical service capacity — amps, voltage, 3-phase? Room for more CNC? |
❌ OPEN |
|
| 97 |
Room to expand on the 1.12 acres? Zoning restrictions? |
⚠️ PARTIAL |
C-3 Heavy Commercial confirmed. |
| 98 |
Environmental assessments / Phase I reports? |
❌ OPEN |
|
| 99 |
Property tax bills (last 2 years) |
❌ OPEN |
|
| 100 |
If leasing RE — lease terms, renewal rights, assignment, escalators? |
❌ OPEN |
Thomas flagged. |
2G. Safety & Legal
→ Related: deal/risks
| # |
Question |
Status |
What We Know |
| 101 |
Workers' comp claims history (5 years) and current EMR |
❌ OPEN |
|
| 102 |
Product liability / professional liability insurance — coverage limits |
❌ OPEN |
|
| 103 |
OSHA/safety logs (last 3 years) |
❌ OPEN |
|
| 104 |
Any parts in nuclear/reactor/weapons systems with downstream liability? |
❌ OPEN |
|
| 105 |
Any environmental, EPA, or state regulatory findings? |
❌ OPEN |
|
2H. Suppliers & Procurement
→ Related: company/overview
| # |
Question |
Status |
What We Know |
| 106 |
Top 10 suppliers by spend, single-source dependencies |
❌ OPEN |
|
| 107 |
Subcontracted processes — qualified supplier count and lead times |
⚠️ PARTIAL |
~15% subcontracted. |
| 108 |
Material shortages, supplier quality issues, lead-time problems (last 2 years) |
❌ OPEN |
|
| 109 |
Where are key outside-process suppliers located? |
❌ OPEN |
|
2I. Growth & Strategy
→ Related: company/competitors, deal/valuation
| # |
Question |
Status |
What We Know |
| 110 |
Has JMS ever bid at Sandia, Livermore, or Oak Ridge? What would it take? |
❌ OPEN |
|
| 111 |
Other DOE facilities where certs would be accepted? |
❌ OPEN |
|
| 112 |
Has JMS explored engineering/design services? |
❌ OPEN |
|
| 113 |
What would it take to add a second shift? |
❌ OPEN |
|
| 114 |
Why do customers pick JMS over competitors? Brand perception? |
❌ OPEN |
|
Documents Needed — By Phase
Pre-LOI (Request Now)
| # |
Document |
Why |
| D1 |
Confirmation that LANL certs/IESL transfer with entity |
Go/no-go |
| D2 |
Summary of open ISO corrective actions (severity) |
Risk assessment |
| D3 |
General backlog/pipeline status |
Price validation |
| D4 |
Confirmation of two notes payable ($42K + $20K) |
Deal structure |
| D5 |
2022 tax return (1120-S) |
Complete financial picture |
Post-LOI (Formal DD)
| # |
Document |
Priority |
| D6 |
LANL blanket agreement(s) with change-of-control language |
🔴 CRITICAL |
| D7 |
All active certifications with expiration dates |
🔴 CRITICAL |
| D8 |
Monthly P&L for 2024 and 2025 |
HIGH |
| D9 |
Current A/R and AP aging reports |
HIGH |
| D10 |
Current BS, P&L, AR/AP, WIP (2/28/2026+) |
HIGH |
| D11 |
Backlog report (job, customer, PO, margin, ship date) |
HIGH |
| D12 |
Employee roster (title, tenure, pay, certs) |
HIGH |
| D13 |
Equipment loan/lease schedules |
HIGH |
| D14 |
Insurance policies with limits/premiums |
MEDIUM |
| D15 |
Audit reports and open CAs (full detail) |
MEDIUM |
| D16 |
PM logs and equipment repair history |
MEDIUM |
| D17 |
OSHA/safety logs and workers' comp (3-5 years) |
MEDIUM |
| D18 |
Property tax bills (last 2 years) |
MEDIUM |
| D19 |
Environmental assessments / Phase I |
MEDIUM |
| D20 |
Customer contracts / blanket agreement templates |
MEDIUM |
| D21 |
K-1 Schedules (2023-2025) |
MEDIUM |
| D22 |
Quality manual table of contents |
LOW |
| D23 |
Top 10 suppliers by spend |
LOW |
| D24 |
Open quotes log / pipeline report |
LOW |
| D25 |
Revenue by work type (3-5 years) |
LOW |
Summary
|
Pre-LOI |
Post-LOI |
Total |
| ❌ Open |
31 |
57 |
88 |
| ⚠️ Partial |
9 |
6 |
15 |
| ✅ Answered |
18 |
0 |
18 |
| 🔴 Deal-Critical |
4 |
3 |
7 |
| Total |
59 |
67 |
126 |
Referenced by