Due diligence is a complex study of company activity, its financial conditions and market position.
Due diligence helps to estimate any possible risks (e.g. financial, legal, taxation, etc.). Information gathering considers any kind of information regardless its origin. The information obtained is studied by different specialists separately with further performing of complex analysis. Due diligence is usually performed by lawyers, auditors, experts and appraisers.
Due diligence — is a procedure of forming objective presentation of a potential investment. It includes investment risks, independent investment estimation and many other factors. Due diligence is firstly aimed at comprehensive check of future deal or investment lawfulness, commercial attractiveness and possible risks.
"Due diligence" usually includes: audit check, property check, financial condition check, taxation and audit;
Nowadays Due diligence means complex study of company activity from financial analysts', auditors' and lawyers' points of view. Due diligence results into report with any risks' detailed description.
Why is Due diligence necessary
The supposed deal's profit and liabilities' estimation (normally business purchasing) is performed by all of the purchased business past, current and future aspects' analysis as well as by reveal of any possible risks. Lack of the due check may lead to bad financial results after change of ownership; may cause legal actions, taxation and financial checks and other negative consequences. Companies' decline after business purchase and often legal actions towards them are evident proofs of low-quality due diligence procedure or of its absence.
Due diligence procedure is firstly necessary not to loose money while purchasing company.
There're plenty of cases in our Company's practice when seller decreased his price considerably after the procedure of Due diligence, it also happened that the buyer refused to buy business because of the concealed debts or enormous risks. Thus, Due diligence expenses are much lower compared to the benefit you get.
