Business Plan and Financing
Due diligence constitutes an inherent part of every transaction. It provides a potential buyer with the results of an independent review and analysis of risks and opportunities of the planned transaction. It minimizes risk related to events taking place after the transaction and provides a solid basis for the post-transaction integration process.
What are the benefits of due diligence?
Due diligence should be based on detailed principles and requirements that the client has set out. It should noted that due diligence is not to be employed in the same form regardless of circumstances. It should, however, address the following questions:
- Is the information provided by the acquired entity as a basis for the assumptions accurate and reliable?
- Have the historical profits of the company been stable?
- What are the potential future profits of the company?
- What is the approach to turning profits into cash?
- What are the potential synergies associated with the planned transaction?
- Taking into account the results of due diligence review, does the purchase price seem reasonable?
- What are the current and future tax implications of the planned transaction?
- What factors may contribute to the failure of the transaction?
- Is the structure of the transaction suitable?
What are the preventive measures to be employed in acquisition process?