Due Diligence is generally used as the pre-investment intelligence tool by investing partners / stakeholders to obtain the advanced and independent report relating to the investee’s credentials.

Due Diligence Review (DDR) is a process in which an individual or an organization need ample information about a business entity to attain conversant conclusion as to its importance for a specific purpose. To purchase a business is generally dependent on the due diligence analysis and report. The Due Diligence Review is to review financial and legal records including anything else supposed material to the sale.

To get hold of of a business takes with it the numerous risks in different areas like management & workforce, markets & products, strategic and unrecorded liabilities, financial, legal & litigation. The company gathers work plans to meet client expectations and goals to offer assurance of smooth acquisition. 

On the other hand, sellers could also request due diligence analysis on the buyer to get help to decide on the ability of the buyer’s to purchase and to be aware of the factors that can play significant role in position of entity after sale.

Here are some reasons for which Due Dilligence Review is carried out:

• Merger
• Venture Capital investment
• Possible Acquisition
• Giving loan for projects

Due Dilligence Review is not an audit but it is much broader than audit. Therefore, DDR requires skill set and experience that go beyond conventional audit. We can consider it the business oriented, not the bookkeeping or record checking or account oriented. Due Dilligence Review need understanding of the business, its pattern, business trends and much important the risk estimation.

TYPES OF DUE DILIGENCE

There are different types of DDR:

• Financial & Accounting Due Diligence
• Tax Due Diligence
• Legal Due Diligence
• Human Resource Due Diligence
• Business/Market Due Diligence
• System Due Diligence
• Environment Due Diligence
• Technical Due Diligence

System of DDR

System of DDR will depend upon the requirements of the client, time on hand and nature of review. At Parikh & Associates, we follow the steps listed below:

• Comprehend the requirements of the client
• Decide the span and intent consequently
• Get ready the list of information to be get from the client
• Every so often convey the information about the status of the DDR to client
• Guides about the additional actions to be taken

Range and Purpose of Due Diligence

We always prefer to discuss with the client the span of DDR to provide the best consultation for the DUE DILIGENCE REVIEW. It is not limited to monetary due diligence but extends to technical due diligence, systems due diligence, market due diligence, operational due diligence, legal due diligence, etc. All of these make the foundation of comprehensive DDR for the following goal. 

• Review the tax position and its connotation
• To evaluate the technical and commercial practicability and source accessibility of the business  
• Look the synergy between the acquirer & target organizations
• Look into matters important to the acquirer
• Evaluate the quality of administration and identify key employees of the Target Company
• Get ready a post-achievement map
• To ensure the agreement of essential ruling and determine the legal responsibility in the event of non-compliance
• To settle the cost of the acquirement or a monetary investment
• Review the hyped assets or under-recorded accountability, hidden assets or responsibility
• Provide value added information about the target’s business.

Operation

The operations for DDR are depend upon the nature of the goal and span define by the client. At the time, level of the comfort and the structure of the acquisition decided.

The proper lines of actions are as follows:

• Program is designed identifing business purpose of the acquisition
• Specify decisive goals and objectives
• Indicate imperative business units and procedures.
• The group of persons comprises of individuals with the apt blend of experience and professionalism for the task.
• The schedule for completing each process is framed by experts
• Documents are produced and get ready
• A structure is formed to take the follow up on open issues
• Specific criteria are established about the types and process of the formation to be obtained
• List of information, which and what is to be collected
• Decide way of work to collect the information
• Realistic approach is followed for the received documents, conversations over it and documents and analysis performed.

Alleviate involved risk

The experts working for the DDR know the intrinsic risk and are prepared to face the compensation of the resulting loss, if any. The team assures for the following matters:

• Apt understanding of the goals for the project before accepting the project and deciding the scope
• Review of other DDR reports examine the copy of the same from the client
• Hold meetings with the other reviewers
• Disclose the scope and limits of the assignment in the DDR Report

 Due Diligence Solutions

 The expert team at Parikh & Associates  works to avoid risk and take undertakings from authorities that encompass as follows: 

• Employee benefit plans
• Contingent liabilities
• Product, service warranties, damages, and other claims
• Intellectual properties’ Registration
• Recover ability of all present assets
• Non-contravention of contracts terms, regulation, and loan covenants
• Titles & ownership
• Different Governments’ consents/licenses.
• Accuracy and totality of all given information 
• Litigation, appeals, etc

At Parikh & Associates, we offer services to bankers, Investors, and acquirers who rely on Due Diligence as a standard of support for the duration of Mergers and Acquisitions.