Due Diligence

Knowledge Center



Summary, forum, best practices, expert tips and information sources.

18 items • 23.245 visits


Summary

What is Due Diligence? Meaning.

Due Diligence is the process whereby an investing party investigates, analyses, and evaluates an intended major investment, transaction, takeover, or business partnership prior to committing capital to it. The purpose of a due diligence investigation is to determine whether the investment makes financial and/or strategic sense and to check if the information about the investment that is available is correct and complete. Also, it is a way of preventing unnecessary harm to either party involved in a transaction.


Some typical areas for due diligence include the key risks associated with the opportunity, quality of the management team, assets, liabilities and solvency, a determination of the  purchase price, press and SEC filings, regulatory and licensing problems, liens and judgments, conflicts of interest, civil and criminal litigation matters, etc.


Forms of Due Diligence. Types.

Several types of Due Diligence can be distinguished, such as:

  • Business Due Diligence: Business due diligence refers to ensuring that the buyer receives all material facts that are needed to make an accurate assessment and a fully informed decision of the real state of the organization while simultaneously not excessively harming the seller's business. Business Due Diligence actually is a very broad concept that includes operational due diligence; market due diligence; environmental due diligence; HR due diligence and other business-related types of due diligence.
  • Financial Due Diligence: Financial due diligence involves a qualitative and quantitative assessment of an organization's financial performance, so as to create an understanding of its earnings and other financial perpectives on a normalized basis. Activities within this type of due diligence include reviewing accounting and auditing procedures; earning and cash flow analysis; reviewing operational processes and information systems so as to assess the extent to which financial information is reliable.
  • Legal Due Diligence: Legal due diligence is associated with risk management. It analyzes the possible legal risks associated with the organization's corporate status, assets and liabilities, securities, employment conditions/regulations and so forth. In short, it analyzes an organization's intra- and inter corporate transactions in terms of its legal aspects.
  • Tax Due Diligence: In tax due diligence, special attention is paid to the tax opportunities and possible pitfalls. It also provides insight into the tax structure and tax history of the company to be acquired and into the tax relationships with other (group) companies or related parties.
  • Secretarial Due Diligence: Secretarial due diligence covers a secretarial audit of the targeted organization, and focuses on ensuring that the targeted organization complies with the rules and regulations of the buying organization.

Special Interest Group

Join

Due Diligence Special Interest Group.



Special Interest Group (34 members)

Forum

New Topic

Forum about Due Diligence.


Technical DD
When an engineer was performing a DD, I understood that although DD normally is a financial issue, (...)
5
 
3 comments
Role of Human Resources in DD
I strongly feel that DD will not be successful until a comprehensive review is made on the following HR aspec (...)
4
 
1 comments
🔥 NEW Treatment of Extraordinary Bad Debt Expenses in EBITDA, NWC and Net Debt
In case of a non-recurring bad debt expense, we add it back to EBITDA in both the direct method and the allowance method (...)
2
 
1 comments

Start a new forum topic about Due Diligence. More info.

 

Best Practices

Sign up

The top-rated topics about Due Diligence. Here you will find the most valuable ideas and practical suggestions.


Expert Tips

Sign up

Advanced insights about Due Diligence. Here you will find professional advices by experts.


IT DD Areas

Information Technology, Assessment, IT DD, Components
Today technology has a direct and major impact on the following things among others: 1. Top line growth 2. EBITDA 3. (...)
Information Sources

Sign up

Various sources of information regarding Due Diligence. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.


DD: Types and Processes, Focus Areas and Relevance

DD, Merger and Acquisitions
Detailed presentation about DD for M&As. The presentation includes the following sections: 1. Agenda 2. Wh (...)

Introduction to DD: Concept and Best Practices

DD, Merger, Acquisition, Strategic Partnership, Intellectual Property, IPO, Business Investigation Process
Presentation about the broad concept of DD, including the following sections: 1. Concept 2. Definition and (...)

Research Links

Sign up

Automatically jump to further useful sources regarding Due Diligence.


News Videos Presentations Books More

News

Videos

Presentations

Books

More


Compare with: Strategic Fit  |  Strategic Risk Management  |  Scenario Planning

Special Interest Group

Do you have a keen interest in Due Diligence? Become our SIG Leader

 
 

Return to Management Hub: Decision-making & Valuation  |  Finance & Investing  |  Strategy


More on Management  |  Return to Management Dictionary

 

This ends our Due Diligence summary and forum.



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2021 12manage - The Executive Fast Track. V15.8 - Last updated: 31-7-2021. All names of their owners.