Diligence is an important step in any investment evaluation process. Diligence comprises of analyzing various aspects in order to ensure the commercial and financial viability of a particular investment. Diligence depends on the asset that is being invested into. The diligence when purchasing a company includes some or all of the following

1) Commercial Due Diligence

Diligence on the growth prospects, competition, and the market

2) Financial Due Diligence

Analyses to ensure that the revenues, profits, assets, liabilities accurately depict the profile of the business.

3) Technology Due Diligence

This is done to check the uniqueness, risk management and robustness of the technological aspects of the target companies products, services and organization.

4) Tax Due Diligence

This refers to activities that check if the company is compliant with all relevant tax laws.

5) Legal Due Diligence

 In this exercise, legal issues from the perspective of the business, operations, shareholding and exit outcomes are evaluated.

6) Background checks

In this exercise, the backgrounds of the management team and company’s practices are checked from a corporate governance standpoint.

 

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