DUE DILIGENCE

Due diligence is a comprehensive audit of potential investees, usually initiated by potential investors or asset sellers in order to learn all hard facts about the investees and identify potential risks and threats. 

Due diligence is an essential part of buying and selling businesses, M&A transactions, buying or selling assets, real estate, or entering into partnerships or joint ventures.

 

DUE DILIGENCE SCOPE

Diligence is a pre-investment investigation that proves whether a property, an asset, or a company meets the expectations of the investor and assesses the commercial potential of that object. The investigation covers:

  • Investment prospects assessment;
  • Investment risks evaluation;
  • Business compliance system;
  • Comprehensive research of the business;
  • Financial standing evaluation; 
  • Market positioning analysis;
  • Examination of company’s reputation and of its owners and management.

 

WHY IT IS IMPORTANT

The Due diligence objectives are:

  • To assess potential investee impartially;
  • To avoid court disputes;
  • To avoid encumbrance over assets or property rights;
  • To prevent corporate conflicts;
  • To impede unfair competition;
  • To provide against liability.