Due Dilligence

Overview


Parking money at the right place, at the right time is a major decision today. And therefore, before relying on any company, what we need is Due Diligence.

Due Diligence involves investigative process that identifies hidden strength & weakness in a business transaction, to check the fulfilment of necessary compliances and to understand the feasibility. But there’s so much at stake, we have to do our due diligence.

  • To protect frauds and misrepresentations because dealings are not always straight forward and obvious.
  • To conduct a SWOT analysis to identify the strength and uncover threats and weaknesses.
  • Bridge the gap between existing and expecting.
  • To take smooth/ accurate action or decision.
  • To enhance the confidence of Stakeholders.
  • To forecast the future performance of an organization by analyzing the potential risks and threats.
  • To help in identifying liabilities, negotiate a lower price, avoid lawsuits and costly mistakes and top of all to make good business and financial decisions.


Process


Planning

  • Study Scope and Core Areas important to each party of the transaction.
  • Defining the time schedules
  • Communication of information requirements

Data Collection

  • Data Completeness, Relevance and Usage
  • Research for data could be either qualitative or quantitative
  • One on one interviews with management from the target company
  • Data room and access to the room

Data Analysis

  • Assess the quality of target’s financial statements
  • Understanding current profitability & risk
  • Financial Analysis using BI tools such as Regression, Hypothesis, Monte Carlo Stimulation.
  • Preparation of Charts to understand trends

Preparation of Due Diligence Report

  • A summary of the scope of the review;
  • A list of all the information disclosed by investigations;
  • An analysis of the documentation and information revealed;
  • An executive summary which outlines the issues identified and advises;
  • Highlight the material issues arising from the due diligence review;
  • And advice(s) on the factors influencing the price to be paid


Area


1. Funding Transactions

2. Merger, Amalgamation & Acquisition

3. Initial Public Offers

4. Partnership

5. Intellectual Property



What we do?


1. Business Due Diligence

2. Financial Due Diligence

3. Vendor Due Diligence

4. Secretarial Due Diligence

5. Legal Due Diligence



FAQs :


1. What is due diligence?

Due diligence is an investigation or audit of a potential investment or product to confirm all facts, such as reviewing all financial records, plus anything else deemed material.

2. When is due diligence performed?

The due diligence of a company can be performed in the following cases:-

  • Before the business sale
  • Private equity investment
  • Bank loan funding, etc.
  • Prior to the purchase of a company or investment in a company by the acquirer or investor
  • In merger, amalgamation, acquisition or takeover cases
3. How long does due diligence take?

Your minimum to maximum signing docs is 2 to 6 weeks.

4. What documents are required in due diligence?

The financial, legal and compliance aspects of the company, operational data are usually reviewed and the nature and extent of the target company’s contingent liabilities, problematic contracts, litigation risks and intellectual property issues other documents of the company.

5. How does a due diligence vary?

The later stage you are and the larger the investment, the more due diligence that is going to happen. There is a fairly direct correlation here.

6. When does due diligence happen?

Once you have received a ‘term sheet’ and have both signed it, due diligence commences. There will be a clause in the term sheet under ‘conditions to closing’ requiring due diligence to happen before you sign the definitive documents and get cash in your bank account.

7. What is the process of conducting due diligence?

1. Identifying the objective - merger, acquisition or investment opportunity,

2. Analysing the present and historical financial statements,

3. Taking care of the corporate tax, direct and indirect taxes and quantification of tax risk,

4. Understanding the organization design such as logistics, finance, operations, technologies and corporate strategy.