Effective Due Diligence depends on identifying and then managing significant transaction issues, anticipating and identifying potentially important risk and negotiation issues. It is imperative to have reliable, timely and qualitative information in any potential transaction to enable informed decision making.
The success of the investigation to make a well-informed decision would lie in a well-planned, integrated and coordinated detailed enquiry procedures.
All the documents of the firm are assembled and reviewed, the management is interviewed and a team of financial experts analyse the information to see if the business is worth buying.
In addition, financial due diligence analyses the assets and liabilities to be acquired.
Due diligence includes a critical review of the target company’s financial statements for the past several years and a review of the financial projections for the coming years.
Other areas which are analysed are:
Minutes and consents of the board of directors and shareholders.
Patents, copyrights, and other intellectual property-related documents.
Licenses and permits related to the operation of the business.