Due Diligence: Financial due diligence is a process in which risk is analysed and mitigated before making a crucial business decision. It involves looking at a company’s financial reports, comparing them over time and also benchmarking them against other similar or competing companies. Conducting a due diligence check can help assess the overall financial health of a company and help in making an informed decision of whether to invest, merge or so on.
We’ll help you identify the right metrics for due diligence and present a complete picture with all the key metrics. With an extensive checklist, we’ll dig deeper into areas like ownership and organisation, assets and operations, share values, growth potential, how the company is managed, important financial ratios, company policies, processes and, even, human resources to ensure that you have a clear picture before making important business decisions.
Due Diligence is a process of research and analysis usually undertaken by accounting or consulting firms. This exhaustive process is taken before a merger or acquisition of an organization, making an investment, entering into partnerships, granting of bank loans to corporate borrowers, vendor selection and even employee Hiring.
A prospective investor would need to make sure that he has a reasonable assessment of the value of the stake which he intends to acquire and that there are no hidden issues or liabilities in the business. Usually the due diligence exercise needs to be done within a reasonable time frame but with a wide scope and in substantial detail. As such, investors typically entrust this task to experts who are well-versed in due diligence and therefore are able to do a thorough check on the financial, tax and compliance position of the company within the limited transaction timeline.
Due Diligence providers prepare a report with a business analysis, setting out the observations on the business by materiality/importance and helps the acquirer in decision making and negotiation.
Due Diligence can be of various types:
● Financial including Tax