Due Diligence

Due Diligence

I What is Due Diligence

Due diligence is the process by which confidential legal, financial and other material information is exchanged reviewed and appraised by the parties to a business transaction, which is done prior to the transaction.

Due diligence is an analysis and risk assessment of an impending business transaction. It is the careful and methodological investigation of a business or persons, or the performance of an act with a certain standard of care to ensure that information is accurate and to uncover information that may affect the outcome of the transaction. It is a background check to make sure that the parties to the transaction have the required information they need, to proceed with the transaction

Due diligence is used to investigate and evaluate a business opportunity. The term due diligence describes a general duty to exercise care in any transaction. As such, it spans investigation into all relevant aspects of the past, present and predictable future of the business of a target company.

II Need For Due Diligence and its Significance

Misrepresentations and fraudulent dealings are not always obvious or straight. These are to be uncovered, especially in major business transactions as it would create a major impact on the business. Proper due diligence services explore and assess the details behind the same and to become fully informed about the financials, business, internal systems, profitability, key operational aspects, management teams, promoters and other material factors that will help making an informed decision about an Investment. Due diligence is designed to protect the interest of the company by providing objective and reliable information on the target company before making any written commitments. Due diligence is an investigative process for providing, the desired comfort level about the potential investment and to minimise the risk such as uncovered liabilities, poor growth prospects, price claimed...