Due Diligence Due Diligence is one of the common terms used in financial parlance. Its requirement is increasing as there is growth in industries; businesses are entering into uncharted territories, and fraudulent acts are taking place. Businesses highly benefit from Due Diligence service as it summarizes all the significant aspects concerning the matter under Diligence.
What is Due Diligence? It is a review or investigation conducted by a person to satisfy himself as to the genuineness of the matter and parties under consideration before entering into a legally binding contract or agreement or transaction. Analyzing the scope of work Submission of Due Diligence Report Understanding the business case It saves one from unnecessary issues arising later. A little homework at the initial stage saves one from a significant misfortune. Due Diligence Analyzing the underlying data Drafting and Documentation It gives the required confidence and understanding about the parties to a transaction and the various aspects of the transaction. Risk Assessment
M&A Due Diligence It helps businesses to know whether the deal will be beneficial for them or not. It helps one understand all the essential information about the target, including its financials, customers, suppliers, technology, intellectual property, and liabilities. Based on it, a business will adjust the expectation it had from the merger or acquisition process. It lets the buyer company know about the potential risks associated with the target business. It will also help the company to define the clear structure after the integration of the targeted acquisition.
Customer Due Diligence Customer Due Diligence is one of the most sensitive and highly important services. In many countries, companies are bound by the law to conduct it. This service is necessary to avoid money laundering and terrorist financing. In case, if the companies do not follow all the measures of it, they may be declared non-compliant, and penalties could be charged.
Vendor Due Diligence Vendor Due Diligence is aimed at gaining a reasonable confidence that the vendor is financially capable, and its corporate governance processes are sound. Businesses perform vendor Due Diligence before entering into an agreement or contract with them. This agreement could be for the supply of raw materials, information technology, or the provision of services. It helps in minimizing compliance risk and reputation risk.
Third-Party Due Diligence The third-party Due diligence service is introduced due to the development of strict anti-bribery laws. The company needs to provide proof that they have taken enough and efficient anti-bribery measures
Financial Due Diligence The financial Due diligence process primarily focuses on identifying the actual financial picture of the company. In this process, the financial data is scrutinized, and the areas where potential risks lie are identified.
Commercial Due Diligence The commercial Due Diligence deals with the broader aspect in comparison to the financial one. Through this process, a private equity firm estimates the commercial attractiveness of a company.
Legal Due Diligence Legal Due Diligence is nothing but an investigation of the legal aspects of a transaction. Accordingly, the legal structure of the entity, contracts, and agreements, assets and liabilities, contingent liabilities, and pending legal proceedings are explored.
Operational Due Diligence Operational Due Diligence aims to understand the operational aspects of a company. An in- depth analysis of its day-to-day functioning, business processes, and procedures and internal controls is made to understand its operational efficiencies.
Significance and advantages It helps in ascertaining the true value of the target company. It saves the company from making a wrong investment and facing losses. Due Diligence is a vital element of every business deal, whether it is between two different businesses or between a business and a client. Due Diligence is itself a risk management tool for companies entering into a business transaction. It helps to make an informed decision and avoid surprises at a later stage. When it is conducted, it will look at the operational and financial details of the company providing the idea to the buyer regarding the growth and financial stability of the company
FAQs How long does the Due Diligence take? The time required to conduct the complete Due Diligence varies according to the scope of work and complexity of the business. Generally, customer Due diligence takes lesser time than the one conducted for a whole company. How does a Due diligence process start, and how does it end? It starts only after both the parties (buyer and seller) sign a letter of intent (LOI),and it ends when both the parties sign a definitive purchase agreement What is the significance of the “Quality of Earnings Report?” The quality of earnings report provides the complete picture of the company’s revenue and expenses according to which one can verify if investing in the targeted company is worthy or not.
Our Due Diligence Service N R Doshi & Partners provides Due Diligence service to safeguard your interests and helps you comply with legal requirements. We use our proprietary ethical and non-intrusive methods with the highest standards of integrity and accountability in all related assignments. Identify key issues early and protect your business interests with our top-notch Service. Our Due Diligence Report helps you make an informed business decision and saves you time and costs. It clearly highlights the outcome supported by our findings and recommendations. Contact us now to get in touch with our consultants and answer all the questions you might have.