Due Diligence

1. Due Diligence Due diligence is a process of verification, investigation, or audit of a potential deal or investment opportunity to confirm all facts, financial information, and to verify anything else that was brought up during an M&A deal or investment process. Due diligence is completed before a deal closes to provide the buyer with an assurance of what they’re getting.

2. IMPORTANCE OF DUE DILIGENCE • Transactions that undergo a due diligence process offer higher chances of success. Due diligence contributes to making informed decisions by enhancing the quality of information available to decision makers.

3. From a buyer’s perspective • Due diligence allows the buyer to feel more comfortable that his or her expectations regarding the transaction are correct. In mergers and acquisitions (M&A), purchasing a business without doing due diligence substantially increases the risk to the purchaser.

4. From a seller’s perspective • Due diligence is conducted to provide the purchaser with trust. However, due diligence may also benefit the seller, as going through the rigorous financial examination may, in fact, reveal that the fair market value of the seller is more than what was initially thought to be the case. Therefore, it is not uncommon for sellers to prepare due diligence reports themselves prior to potential transactions.

5. COSTS OF DUE DILIGENCE • The costs of undergoing a due diligence process depend on the scope and duration of the effort, which depends heavily on the complexity of the target company. Costs associated with due diligence are an easily justifiable expense compared to the risks associated with failing to conduct due diligence.

6. HOW CAN STARTUP MOVERS ASSIST YOU IN DUE DILIGENCE? • REVIEW OF RECEIPT & MAINTENANCE OF REQUIRED DOCUMENTS, INFORMATION AND STANDARDS OF DOCUMENTATION • REVIEW OF FINANCIAL STATEMENTS AND PAST PERFORMANCE • REVIEW OF PROVISIONAL FINANCIAL RESULTS AND PROJECTED PERFORMANCE

7. REVIEW OF RECEIPT & MAINTENANCE OF REQUIRED DOCUMENTS, INFORMATION AND STANDARDS OF DOCUMENTATION • To Check & Review whether requisite necessary documents as called for are on record • To Check & Review whether the documents on record are correct and as per norms • To check & Review whether the company is able to maintain the standards of documentation as per desirable norms and practices

8. REVIEW OF FINANCIAL STATEMENTS AND PAST PERFORMANCE • To Check & review the past financial statements with a view to make note of any shortcomings & check if the reporting is as per reporting standards & framework • To check & conduct a GP/NP Analysis for readers of the DD Report • To check & review on a sample basis the accuracy of sales reported, verification with statutory returns filed, books & sale bill verification • To check & review on a sample basis major voucher of expenditure, revenue & addition to major fixed assets • To review the auditors’ report and make note of any remarks/comments • To review the working capital positions and make relevant analysis required, including inventory verification on a sample basis, WIP in production

9. REVIEW OF PROVISIONAL FINANCIAL RESULTS AND PROJECTED PERFORMANCE • To Check & review the provisional unaudited provisional financial results and compare them with historical performance to make note of any gaps & major developments • To check & review the material transactions affecting overall business

10. Thank You Source : https://www.startup-movers.com/due-diligence/