In the implementation of due diligence, as a rule, the investor is interested, that is, the one who is going to buy or invest money in this or that company. When making a deal, especially a large one, it is very important to have comprehensive information about the object of financing, its real value and possible legal and tax consequences.
The number of persons interested in conducting due diligence, in addition to external investors, includes the shareholders of the company, as well as its top managers. The indicators obtained as a result of verification can subsequently help in the preparation of a securities issue or the development of a mechanism to protect against a hostile takeover.
DueD is also desirable in the following cases:
change in the status of the company due to takeover or merger;
share participation of another owner in the activities of the firm;
change in the structure of top management;
getting help from sponsors;
obtaining loans;
decrease in the efficiency of the company;
seizure of assets;
litigation;
identification of violations as a result of tax audits;
the emergence of labor disputes and conflicts;
loss of intellectual property;
decrease in the company's competitive position.
During the procedure, measures are taken to:
Verification of the accuracy of information about the financial condition of the company.
Assessment of the degree of implementation of plans, both current and strategic.
Analyzing the appropriateness of the company's policy.
Searching for competitive advantages.
Evaluating the effectiveness of the management system.
The overall goal of due diligence is to reduce existing business risks or completely avoid them, including the risk of acquiring a block of shares at an overvalued value, failure to fulfill obligations, the risk of losing money or property.
More information here - https://uk.wikipedia.org/wiki/Due_diligence
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