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Due Diligence

Due Diligence is a process of analyzing in depth, about a business, especially when some crucial decisions are to be made like that of acquisition, entering into some venture like in partnership, or making some important and voluminous investments, now a days by VCs or be it when entity applies for a loan or wishes to offer public issue. This deep investigation reveals insights, be it up or down sides of the financial and other aspects like operational, cultural or strategical risks of the entity or the relevant strengths. It is not just verification of financials information of the entity being acquired or invested into, it is a critical analysis of potential deal to assess the chances of success on both sides of the equation. It definitely is a complex process for both the sides.

Why Due Diligence is required?

Due Diligence is required whenever an insight about an entity is required. It helps you know the entity or any dimension of it in depth.

  • To take crucial decisions of Mergers or while acquiring a firm
  • Technical/Financial Collaborations
  • Entering a new Joint Venture
  • Business Alliance
  • Outsourcing
  • Investment
  • Public Offer
  • Lending transactions
  • VC funding
  • Entering a new Partnership

Benefits of Due Diligence

  • Informed Decisions
  • Helps in deciding true value for the deal – both from buyer’s as well as from seller’s point of view
  • Reduced risk – for lending transactions
  • True legal position of the entity, thus litigation cost can be known in prior
  • Expectations are more realistic
  • Working out of profit margins is easier and known
  • Future planning for product line and technology upgradation

Types of Due Diligence

  • Market Due Diligence or commercial Due Diligence
  • Legal Due Diligence
  • Technical Due Diligence
  • HR Due Diligence
  • Financial Due Diligence
  • Environment Due Diligence
  • System Due Diligence
  • Tax Due Diligence
  • Credit Due Diligence