Due diligence is an intense investigative process carried out before making important business decisions, such as mergers, acquisitions and investments. It involves a thorough examination of the company’s assets, liabilities, and overall financial health. It also examines legal risks and compliance. M&A deals which fail are often the result of incomplete or inaccurate investigations.
There are various kinds of due diligence, each with its own set of requirements. However, the main goal is to discover potential issues which could hinder a deal or increase risk post-transaction. To accomplish this, you must have a variety of resources available to conduct the research. This can include paid online information services, specialist databases and search engines for free.
There are two main how to win business with collaboration categories of due diligence, soft and hard. Hard due diligence focuses on data and numbers, such as reviewing audited financial statements as well as profit and loss reports in addition to balance sheets, projections and budgets. It also involves an in-depth examination of the lease agreements of a company contracts, lease agreements, and real estate details (deeds and mortgages as well as title insurance and use permits), as well as the history of sales and purchases. The information should be compared to similar businesses to determine the company’s size and growth potential.
